This group of ultra high-net-worth entrepreneurs shares their exact asset allocation. Imagine that?
Today in 10 minutes or less, you’ll learn:
- 🐯 What is Tiger21
- 👯 Who are its members
- 📊 Member asset allocations
- 💡 Lessons and takeaways
🐯 Tiger 21: Asset allocation of ultra-high-net-worth entrepreneurs
🤔 What is Tiger21?
Exclusive peer membership network for high-net-worth entrepreneurs and investors with >$20M net worth.
The company is inspired by other mastermind groups (YPO, Vistage), but focuses on the unique personal finance challenges that arise after entrepreneurs exit their business.
Tiger21 has 1,100 members worth ~$135B in personal assets.
👯 Who are Tiger21 members?
- Age: on average, early 50’s; most new members are 30’s and 40’s
- Industries: range from traditional industries (finance/real estate) to Internet companies
- Financial stage: Shifting from wealth accumulation to wealth preservation goals
- Roles: Founders exiting their business, investors, or executives
- Wealth: >$20M in liquid assets
📊 Member asset allocation in Q4 2022
🏘️ Private equity and real estate allocations make up >50%: Private equity recently increased to an all-time-high at 31%, surpassing real estate. However, 70% of members are still looking for new opportunities in real estate for 2023.
- 80% of PE allocation are direct investments, while 20% are fund commitments (entails capital calls)
- Historically real estate has been king. Not primary residence, but investment property (LP in a fund, buy property directly, REIT)
- Tiger21 members carefully manage their liquidity. Many still keep a high allocation in other more-liquid asset classes (cash, public equity) — partly due to past mistakes. For example, in the 2008 recession, many found themselves strapped for liquidity and unable to honor capital commitments.
📈 Public equity allocation declined to 24%: This mirrored the decline in public equity indices, which likely accounted for most of the change (vs people taking money out of public equities).
💸 Cash allocation declined from ~12% to 10%: Signals they’re more comfortable with long-term investments
🪙 Hedge fund declined to only 2%: Interesting to see the decline of hedge funds as a priority within portfolios
🧑💻 40% of members want to invest in tech: Recent economic news hasn’t put off the wealthy completely from making investments
💡 Lessons and takeaways
- Consolidate accounts helps to streamline investments and potentially cut fees: Getting a consolidated view of your assets, liabilities, and equity helps you create a clearer picture. (also makes setting up automations easier)
- Keep cash on hand: Tiger21 members have a large cash pile (10%), which gives them optionality and speed. They can move quickly to invest in time-sensitive opportunities. Plus, not be forced to sell in a drawdown.
- Check on blind spots with your peers: Tiger21 members have to do a “Portfolio Defense,” a 1.5 hour session where they present their entire portfolio, asset allocation, and why they make certain investments. For example, one member discovered a blind spot in his estate planning & charitable giving.
- Great entrepreneur =/= great investor: Entrepreneurs typically become successful by intense focus in a narrow domain and active management, while investing requires more diversification and relying on expertise of others. Michael Sonnenfeldt, founder, said it takes 5 years on average for Tiger21 entrepreneurs to become great investors.
- Wealth preservation requires diversification: Tiger21 members not only allocate to public equities, but also diversify with real estate, private equity, and even cash.
- 90% of members surveyed expect a recession lasting 6+ months: Yet they believe recessions still present opportunities to invest.
📚️ Further reading
- Interview with Michael Sonnenfeldt, founder of Tiger 21, on My First Million podcast
- Personal Finance Lessons From the Ultrawealthy (WSJ)
🙌 Our friends at MFM Newsletter
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🌐 Beyond your borders
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🇬🇷 Searches for Greek Golden Visas jumped 75% in the past month (GCT)
🇦🇺 Australia raises minimum income required for skilled worker visa from AUD $53.9k to $70k (AP)
🇺🇸 Multiple US tech companies reportedly colluded to cheat H-1B visa lottery (WSJ)
