Ultrawealthy Tiger 21 Members Favor Equity Investments

Annual survey shows hedge funds, private equity and real estate among other choices

The annual Tiger 21 Member Favorites Survey, released Friday, shows that public equities again ranked as favorite investment of the 200-strong ultrawealthy peer group, representing more than $19 billion of combined investable assets.

The percentage of Tiger 21 members who said their favorite investment category was public equities rose to 39% from 31% in 2011.

This was the third year in a row that equity-themed investments ranked as the members’ favorite, although allocations to various vehicles within this space have shifted from prior years.

For those who favored individual stock purchases, this category decreased from about 50% last year to 43% this year. However, ETFs/index funds increased four percentage points to 23% this year. Six ETFs were among the top 20 favorite equity picks.

Master limited partnerships continued to appeal in the equities investment category; these provide the tax benefits of a limited partnership with the liquidity of publicly traded securities. Members invested either through MLP funds, direct investments into MLP equities or baskets of equities managed by advisors.

For the second consecutive year, members chose Apple (AAPL) as their favorite individual stock. The SPDR S&P 500 ETF (SPY), Berkshire Hathaway (BRKA), Exxon Mobil (XOM) and Microsoft (MSFT) rounded out the top five.

The most favored public equity sectors for investment, in order of importance, were ETFs, financials, energy, health care and consumer staples.

“The generally positive stock market performance over the past year may be partly responsible for the increase in the percentage of respondents who said public equities were their favorite investment in the past year,” Tiger 21’s founder and chairman, Michael Sonnenfeldt, said in a statement.

“Yet more telling might be the types of equities and the method of investing that members have chosen.”

Nineteen percent of members selected hedge funds as one of their top investment choices, with 35% favoring equity long/short funds, 18% event-driven funds, 15% each macro and multi-strategy funds and 9% each relative value funds and funds of funds.

Another 15% of members now invest in private equity, a historic high for the category. Many favor direct investments in private companies over investing in funds, and this seems to be a growing trend among members.

Eleven percent said real estate was their favorite investment. Most popular were commercial real estate investments in shopping centers and office buildings.

Fixed income drew a favorite response from 8%, with members preferring municipal bonds over other fixed income investments. Four percent selected investments in cash and cash equivalents.

Only 3% of members favored commodities, down from 7% last year. Gold and silver investments were of most interest, mainly through funds, although a few members mentioned physical exposure to those metals.

Asked to name favorite managers across all types of investments, members looked mainly to hedge funds, including Alpine Associates Advisors, Balestra Capital Management, Elliott Management Corp., Millennium Management, MKP Capital Management, York Capital Management and Ramius Advisors.

They also named Golub Capital (private equity), Chickasaw Capital Management (MLPs) and Staubach Capital Partners, now part of Jones Lang LaSalle (real estate). 

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