Lifestyles of the Rich & Famous

As the global economy and its respective leaders seek to deal with the ongoing trade war between the US and China, a select class of people in the US and worldwide are making changes to their investment portfolios. This class of people, referred to in the financial industry as Ultra High Net Worth Individuals (“UHNWIs”), are reducing their equities exposure, and increasing their cash holdings, according to Michael Sonnenfeldt, founder of investment club Tiger 21, a 700+ strong member group with $71 billion in assets. Sonnenfeldt believes that “uncertainty of government policy” and general market volatility is driving this shift in investment behaviours. Interestingly, a recent study conducted by IIFL Wealth and Wealth-X shows that a significant number of HNWIs are placing their cash into investment funds to find returns. The rise in Alternative Asset Investments can be attributed to this action, as a fund is technically an alternative asset. Another factor is these funds’ investment behaviour, as highlighted in a recent report by alternative asset research and data company Preqin, which serves 80,000 Investors, fund managers, placement agents and other industry professionals. In a previous blog I wrote, I covered off on why we’re seeing negative interest rates and touched on some of Preqin’s key findings. To see this blog, click here. The UHNWIs aren’t just placing their money into Hedge Funds, with these ultra-wealthy individuals also investing in various objects of desire like art, cars, and rare whiskey. Knight Frank detail this investment behaviour in its annual ‘Wealth Report’, which shows that some of these investments have fared well. We are in unique times, where falling interest rates (with some countries going negative) are impacting idle cash and challenging the standard investment practices which have served people well in recent decades. Unique times call for unique investment strategies by both UHNWIs and other investors, namely an approach that involves diversification. To learn more about how we are helping investors diversify their portfolios, click here and join The Nebula. James Kouzinas

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