Wealthy Investors Focusing on Growth in 2013

Ivan Andrews / August 7, 2013

Markets are abuzz with the news that some of the wealthiest investors are getting focusing carefully on the 2013 market. This came out from the findings of a survey conducted by Institute for Private Investors. The findings show that families having net worth of $30 million or more have more focus on growth rather than preserving their capital.

There has been a slight fall in number of families that are keen on protecting their worth. This number has fallen from 43 to 36 percent this year. Less is being put into cash with around 42 percent of respondents pointing out that they plan to decrease the cash allocation during 2013.

Meanwhile, the ultrawealthy are getting bullish on stock with more than half of them planning to increase the allocation to the U.S stocks. According to Mindy Rosenthal, the President of Institute for Private Investors, the wealthy people are feeling the urge for rebuilding their wealth that was lost during the recession phase.

Elaborating further on the issue, Mindy Rosenthal points out that the investors are much concerned about preserving their capital and at the same time they realize that it is necessary to preserve wealth as this would be needed to generate more returns.

According to the survey, the ultrawealthy were able to chalk out solid returns last year. The average return net of the fees was around 10 percent. Though this was below S&P’s performance of 13.4 percent, the same was much on the higher side as compared to Dow’s increase of around 7.26 percent.

Hedge funds and stocks weighed primarily on the minds of wealthy during the last year. The U.S equities during 2012 were 18 percent of their portfolio as compared to 14 percent of the global equities. While municipal bonds accounted for around 7 percent, taxable bonds made for around 10 percent.

Funds or funds and Hedge funds made for 18 percent, according to the study. Private equity was able to rake around 10 percent. Most of the rest slot was accounted for by commodities, venture capital, direct investments in private sector and real estate direct investment.

However, the path ahead seems clear for the investors who are keen to go in for private equity and direct investments in private companies as compared to investing in hedge funds.

While 44 percent of the respondents of the survey pointed out that they were planning to decrease the allocation to taxable bonds during 2013, 37 percent of the respondents pointed out that they would be cutting out on the municipal bonds. Around 30 percent of the investors were planning to increase the allocation to direct investments, thereby reflecting the optimistic mood prevailing in the market. As pointed above hedge fund allocation could also see a downfall with over 28 percent of investors pointing out that they could perhaps reduce the allocation to this segment.

It is amply clear from the findings that ultrawealthy investors are focusing much on stocks and are watching growth with keen interest while making investments for the future. This is a good sign for the economy too as decisions taken with care often have a bearing on the mood of the market too which is looking quite healthy at this point.



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