Skip to main content

Wealthy investors had 33 per cent of their portfolios on average in real estate at the end of the second quarter.

Sheldon Kralstein/Getty Images/iStockphoto

Wealthy investors boosted bets on real estate and left hedge funds and equities as concern over high valuations and geopolitical risk pushes them back to basics.

They had 33 per cent of their portfolios on average in real estate at the end of the second quarter, according to a survey by Tiger 21 released Tuesday. That's a record since the group of high net-worth investors started measuring aggregate allocations in 2007.

The average allocation of members in hedge funds fell to an all-time low of 4 per cent. That compares with about 5 per cent in the fourth quarter of 2008 in the midst of the financial crisis. Hedge funds have been under pressure from investors troubled by their high fees and poor performance.

Story continues below advertisement

Michael Sonnenfeldt, founder of Tiger 21, said in an interview that the increase in real estate exposure is an "extraordinary move" that's taken place as investors have shifted out of hedge funds and stocks. Poor returns from fixed income and concern about geopolitical risk also contributed to the move, he said.

"Our members are most comfortable with assets they can have direct ownership of. They can own a building or a part of a small company," Sonnenfeldt said, adding that many Tiger 21 members made their money in real estate and private equity. "When you have such a low ability to produce returns you go to income-producing assets."

The Tiger 21 survey differs from a more optimistic report on hedge funds last week from Credit Suisse Group AG that showed allocators intended to increase investments in hedge funds over the next six months.

Tiger 21's network includes members with assets of about $10-million to $1-billion, and represents a combined $51-billion. The survey represents responses from about a quarter of the group's 520 members, Sonnenfeldt said.

Royal LePage CEO Phil Soper says there may be a cumulative effect to policy changes meant to cool housing markets. This video is a clip from a Facebook Live discussion between Soper and Globe and Mail real estate reporter Janet McFarland
Report an error
Comments

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • All comments will be reviewed by one or more moderators before being posted to the site. This should only take a few moments.
  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed. Commenters who repeatedly violate community guidelines may be suspended, causing them to temporarily lose their ability to engage with comments.

Read our community guidelines here

Discussion loading ...

Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.
Cannabis pro newsletter