High-Net-Worth TIGER 21 Members Weigh in on Favorite Investment Strategies; Equities Top List Balanced by Muni Bond Selections
High-Net-Worth TIGER 21 Members Weigh in on Favorite Investment Strategies; Equities Top List Balanced by Muni Bond SelectionsNew York, NY July 29, 2010 – While the current investment climate still gives individual investors pause, the Members of high net worth learning group TIGER 21 have displayed a diverse and disciplined roster of preferred investments, with traditional equity strategies and municipal bond funds mentioned most often. This finding is part of a recent survey of Members that sheds light on what investment strategies they currently favor, and in particular with whom they feel most comfortable investing.
TIGER 21, whose approximately 140 Members nationally maintain investable assets of more than $10 billion, asked its Members to name their favorite investments and the percentage of their portfolios allocated to those investments. Responses were then grouped into appropriate investment strategy categories.
The investment strategy most often cited as a favorite among TIGER 21 Members was in traditional equity-related platforms - chosen by 33% of respondents as at least one of their top choices. The vehicles for these investments were spread across the full spectrum of equity investing, with the majority in funds or managed accounts. Direct investment in stock was cited by 23% of respondents and Berkshire Hathaway was named most frequently. This is indicative of the long-term perspective that most TIGER 21 Members have toward investing.
Breakdown of equity-related investments includes:
• 23% of equity-related investments were generated through managed accounts
• 26% of equity-related investments were generated via mutual funds
• 23% of equity-related investments were generated through individual stock purchases by
Members
• 14% of equity-related investments were generated through index funds (half of which
were broad-based, and half of which were focused on specific industries or geographies)
• 12% of equity-related investments were generated through ETFs, again, split between
broad-based selections and sector/geographic bets
• 2% of equity-related investments were generated via a long-only hedge fund
Members’ equity investments also made up a low percentage of Members’ overall portfolios – with 77% of respondents allocating less than 15% of their portfolio to traditional equity strategies, and of that number, 30% allocating less than 5% to it.
Municipal bonds were the second most popular investment strategy cited, with 28% of respondents listing this typical safe haven among their choices. More than half of those saying they held muni-bonds in their portfolio had greater than 20 percent allocated to this category. Respondents mostly rely on outside managers to oversee their municipal bond portfolios, either via managed accounts or dedicated bond funds. The most commonly mentioned fund manager for this type of investment was the Slevin Wealth Management Group of RBC Wealth Management.
The third most popular investment strategy was Long-Short Equity Funds. 22% of respondents cited funds that aim to buy long equities that are expected to increase in value and sell short equities that are expected to decrease in value as among their favorite holdings. The most often named managers utilized by TIGER 21 Members in this category are Greenlight Capital and Alkeon Capital Management. While a majority of respondents who favored this vehicle have less than 10% of their portfolios allocated to this category, at least 13% had more than 30% invested in long-short equity funds.
Private Equity/Debt funds, Multi-Strategy Funds, and Event-Driven/Distressed Funds each received an equal number of Member responses at 19% each. The economic downturn in 2007-2008 has provided ample opportunity for distressed investing with a number of funds positioned to benefit. These include such funds from private equity /debt managers like Golub Capital and Bain Capital, which were named as favorites in this category. Event-Driven/Distressed opportunities singled out by TIGER 21 Members include funds run by Hildene Capital, Paulson & Company, Sandalwood Securities, and Ehrenkranz & Ehrenkranz. Obtaining diversification from Multi-Strategy Funds has become popular with Members who cited Elliott Associates and Brigade as preferred managers in this area.
Master limited partnerships (MLPs) were popular with 14% of respondents. While technically equity securities, these mainly natural resource companies that combine the tax benefits of a limited partnership with the liquidity of publicly traded securities are viewed by most TIGER 21 Members as having highly distinctive investment characteristics from those of more traditional equity securities. Popular management firms utilizing MLPs include Chickasaw Capital Management and Neuberger Berman’s Income Plus Portfolio.
Real Estate was also noted by 14% of respondents as a favorite investment strategy. In fact, several TIGER 21 Members made their fortune in the property market and maintain sizeable holdings in this sector.
Global Macro Funds were the ninth most popular investment vehicle with 13% of Members naming this type of strategy as a favorite investment. Balestra Capital was the most often cited fund named by Members utilizing this strategy.
Gold rounded out the top 10 investment strategies, with 6% of Members indicating they favor this approach. Exchange traded funds make up roughly half the gold-related investments, while the remaining Members actually invest in the physical asset. Notable here is that of the respondents that chose gold, 50% indicated they had between 11% and 15% of their portfolios allocated to it and a full 25% had between 16% and 20% in gold.
“The survey shows the diverse, yet sophisticated nature of TIGER 21 Members’ investment portfolios. In making their decisions, many of our Members have come to rely on one another for input on asset allocation and investments whether via our trademarked Portfolio Defense process or through individual discussions with their group Members,” said Michael Sonnenfeldt, founder and chairman of TIGER 21. “Also notable is the caliber of the specific investments mentioned by our Members. While certainly not all-inclusive, the list does contain top-quality funds and managers, many from which TIGER 21 groups have had the benefit of receiving personalized presentations.”
About TIGER 21:
TIGER 21 (The Investment Group for Enhanced Results in the 21st Century) is the nation’s premier peer-to-peer learning network for high net worth investors. TIGER 21 has approximately 140 Members who collectively manage over $10 billion in investable assets and have been entrepreneurs, inventors and top executives. TIGER 21 focuses on improving investment acumen as well as exploring common issues of wealth preservation, estate planning and family dynamics beyond finance. Founded in 1999 by Michael Sonnenfeldt, TIGER 21 is headquartered in New York City and has groups in Los Angeles, San Francisco, San Diego, South Florida, and Dallas, as well as groups forming in Washington, DC and across Canada. More information can be found at www.tiger21.com.
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