Where the super rich are investing their money

Ultra-high-net-worth individuals invest in various asset classes, with real estate losing its top spot.

This is according to Tiger 21, whose 1,450 global members have personal assets that exceed $165 billion.

The TIGER 21 Asset Allocation Report looks at members’ aggregate asset allocations (on a trailing 12-month basis) based on their annual portfolio defence presentations.

Members are generally entrepreneurs, investors, and top executives who sold their businesses and are usually concerned about preserving their wealth.

Private equity has toppled real estate as the largest allocation in recent years.

Real estate was king for 15 years because many members created their wealth in the real estate arena.

The long bet is now on private assets, with public assets down to only 22% among members amid the growing concentration of indexes and exchange-traded funds, even within the shrinking public equity allocation.

The Magnificent Seven, which includes Apple, Microsoft, Amazon, NVIDIA, Meta, Alphabet, and Tesla, still provide benefits for those in public markets. A TIGER 21 survey showed that 43% of the members are invested in NVIDIA, with 57% expecting the firm’s success to last for the next decade.

“In recent years, investing in the Magnificent Seven has offered a unique opportunity to invest in AI by buying shares in the top technology companies, and whether AI succeeded or failed, what was left of each company was still a world-class technology leader with almost endless possibilities,” said Tiger21’s Michael W. Sonnenfeldt

“Previously, to play a new high-tech opportunity you had to invest in a small company that was so dependent on one innovation that there was little left of the investment if it failed.”

“To reflect on these trends, public equities offer some benefits such as liquidity, transparency, regulatory oversight, and lower fees, while superior returns were historically gained in the illiquid private equity markets.”

“However, the outperformance of the Magnificent Seven has been extraordinary. Periods like this have occurred in the past, but now, the outperformance has largely been concentrated in these seven unique tech stocks. Simply put, they have driven the markets.

After holding the number one spot for 15 years, real estate is now the second-largest allocation of portfolios at 26%.

Although there is still opportunity in late-mile real estate, there is far less interest in office and retail space.

“Because our Members can invest directly in distressed opportunities and often have created their wealth as developers, they can better leverage the opportunities available in the current dynamic real estate markets.”

“Whereas a seller might be trying to offload an underutilized office building, nimble investors may see that as a future residential or hotel offering where the renovation costs can create an attractive financial opportunity, dynamic change creates winners and losers, and for those prepared the opportunities can be compelling.”

Although the global economy is entering murky waters, members are heavily investing ‘long’, with 76% of their real estate, public equity, and private equity portfolios.

Members also that venture capital offers the most significant growth opportunity within private equity.

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