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Portfolio > Alternative Investments > Private Equity

Tiger 21 Ultrawealthy Members See Slower Year Ahead

By Michael S. Fischer

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Ninety-one percent of respondents in a survey of the Tiger 21 network of ultrahigh-net-worth members said the overall financial markets’ performance last year was better than expected, but most expect weaker performance this year.

Another 8% of members surveyed said the performance was what they had expected, and only 1% thought the markets had underperformed.

Tiger 21 comprises some 220 members who collectively manage more than $20 billion in investable assets.

Survey respondents were also largely pleased with their own portfolio’s 2013 performance. Sixty-two percent said their own investments had done better than expected, and 27% said they had performed as expected. Only 11% expressed disappointment about their investments’ performance.

Tiger 21 members had a more somber outlook for 2014, with 66% of respondents thinking that the overall markets’ performance would be worse, 26% thinking it would be about the same and just 8% expecting it to be better than last year’s.

When asked which asset classes gave them most hope in 2014, the top four responses were public equities (27%), private equity (22%), real estate (18%) and hedge funds (11%).

All other asset classes received less than 10% of votes. 

Tiger 21 said in a statement that this aligned with the latest asset allocation numbers for members, which had public equities, real estate and private equity in the top three positions as of the fourth quarter of 2013. 

In Tiger 21’s annual Member Favorites Survey, equity-themed investments also took the top spot, followed by private equity and hedge funds, with real estate close behind. 

Asked whether anything on their 2014 resolution list pertained to personal finance, members’ responses included the following:

  • Holding more cash in order to be ready for the cycle to change
  • Changing financial advisors
  • Moving “long term”’ or liquidity neutral into partnership funds to try to capture illiquidity premiums and, it was hoped, outperform slowing public markets
  • Finish the investment strategy for taxable individual investors

Respondents also listed more typical responses, such as being more proactive and focusing on estate planning.

“Coming off a year when the S&P posted an astounding total return of 27%, it is not surprising that members are anticipating a less robust stock market in 2014,” Tiger 21’s founder and chairman, Michael Sonnenfeldt, said in a statement. 

“Most of our members are reasonably diversified across a series of asset classes and so, on the one hand, their entire portfolio did not grow as much as the S&P, but it also means that if there is a pullback, they will be somewhat insulated as well.”

Sonnenfeldt noted that Tiger 21 members had significantly increased their exposure to private equity, both in funds and by investing directly in small private companies and often by getting personally involved.

Many members, he said, had created their own wealth through private forms of equity, and the buoyant markets had encouraged them to keep building private companies, which often go public or sell out.

“So while our members remain concerned about how much further public markets can grow, and some are concerned about a serious pullback, it is clear that investing directly in private companies and real estate—through funds and directly—remains an increasingly important part of their investment strategy,” Sonnenfeldt said.

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Check out Tiger 21’s 5 Favorite Stocks & Fund Managers on ThinkAdvisor.

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