Billionaires Invest Differently
What are the world’s billionaires investing in these days? UBS and Campden Wealth recently conducted a survey analyzing the portfolios of more than 100 billionaire family offices spread across Europe, Asia and the U.S. The study captured a few key differences: U.S. investors have a higher share of their wealth in equities and developed market fixed income. Asian investor’s keep 3% of their wealth in “wine, art and watches” and have a relatively small exposure to hedge funds and private equity. Europeans, meanwhile, hold 21% of their wealth in real estate, roughly the same as they have in stocks.Fun fact from 2011: "Bill Gates’ Children Mock Him With ‘Billionaire’ Song"
These regional differences aside, the research found that the super wealthy are loading their portfolios with between 45% and 62% in alternatives, while keeping 10% to 15% in cash (see table below). Simon Smiles is UBS’ chief investment officer for clients with 50 million Swiss francs ($55 million) and manages some 447 billion Swiss francs. He says his wealthiest clients are underweight equities and recommends greater exposure to the U.S. and Canadian stock markets in particular.
“Today, conversations about what is risky and what is less risky are radically different than in the past,” he says. They are, in fact, overweight cash, still wary of equities after weathering the 2008 collapse, and don’t like what the likelihood of rising interest rates will do to 10-plus year Treasury bonds. This is not an entirely new discovery. For more on these themes, see our March Penta cover story, “Treasure Hunt.”)
But, more interestingly, Smiles believes a different perception of time is also a big factor in their unusual portfolio decisions. UBS Wealth Management’s smaller client accounts are comfortable planning for 6-months of immediate cash-flow needs, Smiles says, while his wealthiest clients take a “multi-decade approach” to meeting their financial needs. The conversation is radically different, in other words, with the super wealthy hyper-focused on wealth preservation over multiple generations....MORE
