Want to know where the wealthy are putting their money these days? You’re in luck. TIGER 21 has released its latest Asset Allocation Report, which provides a snapshot of its members’ investment portfolios as of the first quarter of this year.
There haven’t been any radical shifts on a quarter-over-quarter basis, but a year-over-year comparison proves interesting. It should be noted that the report does not detail which shifts are due to active rebalancing versus changes in valuations.
“While many TIGER 21 members might feel the worst of the economic troubles are behind us, general consensus is that we are in no way in the clear,” said Michael Sonnenfeldt, founder and chairman of TIGER 21. “Members continue to pursue a cautious approach to investing and are making very deliberate moves with their portfolio, only after much research and discussion.”
In aggregate, members of the affluent investors’ club have shaved two percentage points from their cash allocations, which now stand at 12%, down from 17% a year earlier. The report says its members “like to keep at least a three or four year reserve in cash and cash equivalents.”
So where have they deployed that extra capital? Not fixed income. Bond holdings declined five percentage points in the first quarter to 15%. That’s down from 20% a year earlier. Given that bonds have held up quite well over the past year, this shift is probably intentional.
Members’ publicly traded equity allocation declined two percentage points since Q1 of 2011, to 22%, well below the 30% held in stocks prior to 2009.
Where they did increase their allocation was to private equity, which rose four percentage points year-over-year to 14%. It should be noted that it is difficult to put a precise value on private equity holdings.
“Many TIGER 21 Members have considerable personal experience in the private equity sector and believe that over the long term it represents some of the best opportunities to preserve and build capital,” the report points out.
The largest increase in allocation over the past year was in real estate, which climbed five percentage points to 24%. Again, this shift in portfolio allocation could be more indicative of rising real estate values, rather than active capital redeployment.
Allocations to currencies, commodities, hedge funds, and real estate did not change from last quarter.
“There’s a sense from TIGER 21 members that they want to get back into some things that are less volatile and more income- and yield-generating,” says Thane Stenner, managing director and founding member of TIGER 21 Canada. “They are used to having their assets produce for them.”
Stenner also sees interest by some members in private equity, particularly in the technology space and secondary markets that provide liquidity to distressed sellers.
TIGER 21, whose approximately 200 Members throughout North America maintain investable assets in excess of $18 billion, collected member data measuring aggregate asset allocation exposures based upon members’ annual portfolio defense presentations. Quarterly tracking of these trends by TIGER 21 is now in its fifth year.