3 Investment Trends of Ultra-Wealthy

“These are very long-term holdings,” Rosenthal said of hard assets. “Advisors need to help their clients understand what they’re trying to achieve, what are the risks.” Whether they’re interested in real estate, timber or private companies, wealthy families also need to consider how those assets fit with their risk profile and their family dynamic.

“I could be tolerant of risk,” Rosenthal suggests, “but it needs to be wed with what I’m trying to achieve.”

More than half say they plan to increase direct investments in private companies in the next year, but the overall trend began in 2008, Rosenthal says. “We see it strongly with younger, next-generation investors, who may be in their 40s all the way down to their 20s.” Those younger investors, Rosenthal notes, have a much different experience of the capital markets from their parents’. Some families, she adds, can trace their wealth back to the original purchase of a business. “These investors have a natural inclination to view a business as a wealth driver.”

As for which sectors they’re drawn to, Rosenthal says that it just depends on where wealthy investors’ experience lies, rather than “throwing out a net.” If wealthy investors are planning on co-investing, they also look for partners with good experience. “They’re looking for people who bring more than just money,” Rosenthal says.

“We’re seeing definite changes in the way private investors approach portfolios, but this is a continuation of things we started to see in 2008. This isn’t a wholesale movement,” Rosenthal concluded. Furthermore, “it’s not all their assets,” she points out. “Outside their core portfolio, they are looking at other investments and looking at things differently.”