Yana Iskaeva
The lives of the super-rich are very different, and their investment strategies are very different from the average investor’s portfolio.
“While there is no official threshold, being a millionaire, or an individual with a net worth of more than US$100 million, is a good criteria to enter the 0.001% club,” said Kevin Teng, CEO of ultra-wealth firm WRISE. Asset Management Singapore. – High net worth individuals.
Globally, the population of millionaires is about 28,420, data from WRISE shows, with major concentrations in New York City, the Bay Area, Los Angeles, London and Beijing.
“These cities have strong financial infrastructure, vibrant entrepreneurial ecosystems and lucrative real estate markets, making them attractive destinations for the ultra-rich,” Teng told CNBC.
Teng said this population, “the epitome of extreme wealth”, is selective in its investments.
“Today, they’re not investing in something that makes them rich, quick, liquid,” said Salvatore Buscemi, chief executive of Dandro Partners, a private family investment office. “That means they’re not really investing, for example. In public Stocks traded.”
“Believe it or not, they don’t even actually invest in cryptocurrency,” Buscemi told CNBC via Zoom. “All they want is to preserve their heritage and their wealth.”
1. Real estate
As a result, billionaires often have “very strong, stable real estate” in their portfolios, Buscemi said. These wealthy individuals gravitate towards ‘trophy assets’ Class A properties or investment-grade assets typically built within the last 15 years.
Michael Sonnenfeld, founder and chairman of Tiger21, a network of ultra-high-net-worth entrepreneurs and investors, told CNBC that real estate investments typically account for 27% of these individuals’ portfolios.
2. Family office as an investment vehicle
Andrew Amwells, an analyst at global wealth intelligence firm New World Wealth, said that the funds of a person with such wealth are usually managed by a single family office that includes property, household bills, credit cards, immediate family expenses, etc.
“These family offices often have philanthropic foundations and venture capital arms that invest in high-growth startups,” says Amours.
The number of family offices worldwide has tripled since 2019. Last year, there were more than 4,500 companies managing assets worldwide, with total assets under management of $6 trillion.
3. Alternative investments?
Ultra-high-net-worth individuals are also exploring the possibility of buying stakes in professional sports teams, Dandro’s Buscemi said.
“This is a very, very isolated group that needs more than just money,” he said.
Buscemi explains that exclusivity is a major attraction because these wealthy individuals want to associate with others of a similar status. Owning a stake in a sports team is a way for these people to validate their status, he said.
“In the United States, when you buy an NFL team, they knight you,” he said, just as American businessman and billionaire Jerry Jones bought the Dallas Cowboys in 1989.) Same.
WRISE’s Teng also noted that 0.001% is more focused on fixed income, personal loans and alternative investments. He said the attractiveness of personal loans is increasing as investors look for sources of income outside traditional markets.
“This trend reflects growing interest in unconventional assets with unique risk-reward characteristics,” said Teng, adding that alternative investments include venture capital, private equity and real assets.
