TIGER 21 Quarterly Asset Allocation Report Shows Real Estate and Private Equity Remain Attractive in Low-Interest-Rate Environment

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Aug 02, 2016, 08:30 ET

NEW YORK, Aug. 2, 2016 /PRNewswire/ -- TIGER 21, the premier peer-to-peer learning network for high-net-worth wealth creators, today announced the results of its second quarter Asset Allocation Report which present further evidence of a shift toward private equity and real estate investment.

The quarterly report, which is indicative of the specific investments most attractive to TIGER 21's affluent Member base, shows private equity and real estate investments now comprise almost half of Members' portfolios. In the past three months, real estate investments inched up one percentage point to 26 percent, while private equity remained flat at 23 percent, but nonetheless represented its highest allocation level since 2007.

TIGER 21 Members' cash allocations also increased during the second quarter, reaching 11 percent – the highest levels seen since the third quarter of 2014.

This continued emphasis on traditionally riskier investments is a response to a sustained low-interest environment which has made it increasingly difficult for TIGER 21 Members, many of whom have accumulated significant wealth from building and selling businesses, to generate income from capital. With the benchmark 10-year U.S. Treasury note reaching a historic low of 1.385 percent early in July, it comes as little surprise that TIGER 21 Members are leveraging their investment acumen to source alternative means of cash flow.

"In the current economic climate, our Members are seeing the benefits of taking calculated risks in order to generate returns," said Michael Sonnenfeldt, Founder and Chairman of TIGER 21. "Our Members have responded to the fallout from the global financial crisis, characterized by a pervasive lower-interest rate environment, by reducing their fixed income investments from 23 percent to 10 percent and are instead focusing on private equity and real estate allocations."

Public Equity remains a core part of Members' equity/risk allocation at 21 percent and, in total, the three main equity or risk components of Public and Private Equity plus Real Estate add up to 70 percent – which is just about the highest combined allocation of these three investment vehicles ever recorded. "In a low- to negative- real interest rate environment, if you are trying to stand still, you are almost surely going backwards, and with the ability to generate meaningful income from bonds and other fixed income instruments almost completely gone, Members are having to take on more risk to get their portfolios to perform, even at modest levels," said Sonnenfeldt. "What makes this so challenging for investors today is that we know how to measure returns, but measuring risk is a far more daunting task. Most risk measures are built off of historic performance, instead of assessments about the risks ahead. That is where our process can add the most value, because bringing multiple and diverse points of view into the discussion can help identify risks and quantify them in ways that individual investors are far less capable of doing."

"Our Members are generally conservative and astute investors who have structured their portfolios to leverage potential opportunities and make money, regardless of global market corrections," added Sonnenfeldt. "This portfolio pragmatism is certainly honed as a result of participation in TIGER 21 Groups, which act as an independent board of directors for Members. Our Portfolio Defense meetings require Members to disclose their asset allocations in a highly confidential setting to fellow high-net-worth peers, facilitating meaningful and unbiased discourse regarding the potential risks and rewards of their investments."

TIGER 21 now has more than 440 Members, who manage in excess of $45 billion in personal investable assets, across the U.S. and Canada. The quarterly Asset Allocation Report indicates that the Membership as a whole has remained well-prepared in their portfolios and thus relatively unmoved by the recent fluctuations in the world markets. To view the report in full, please click here.

Methodology:
The TIGER 21 Asset Allocation Report measures the aggregate asset allocation exposures of TIGER 21 Members based upon their Portfolio Defense presentations. This data is collected over the course of the year and reports are issued on a quarterly basis. To ensure a more meaningful asset allocation representation, the collective data is represented in year-over-year format as stated at the end of each quarter.

About TIGER 21
TIGER 21 (The Investment Group for Enhanced Results in the 21st Century) is North America's premier peer-to-peer learning network for high-net-worth wealth creators. TIGER 21's Members are entrepreneurs, investment partners and top executives. TIGER 21 focuses on improving investment acumen as well as exploring common issues of wealth preservation, estate planning and legacy and family dynamics. Founded in 1999, TIGER 21 is headquartered in New York City and has groups in Atlanta, Austin, Boston, Chicago, Charlotte, Dallas, Denver, Houston, Los Angeles, Miami, New York, Newport Beach, CA, Palm Beach, San Diego, San Francisco, San Juan, PR, Seattle, Tysons Corner, VA, and Washington, DC as well as Canadian groups in Calgary, Edmonton, Montreal, Toronto, and Vancouver. Groups are currently in formation in London.