Tags: Wealthy | Investors | US | Stocks

Wealthy Investors Avoid US Stocks, Pour Cash Into Private Firms

Tuesday, 05 June 2012 10:36 AM EDT

A new study from the Institute for Private Investors (IPI) shows that ultra-high net-worth investors (UHNW) are shying away from U.S. stocks and putting more money into private companies, real estate and commodities, MarketWatch reports.

The families tracked for the study have minimum assets of $30 million, with four in 10 families holding assets of $200 million or more.

"The portfolio allocation and investment trends reported by ultra-affluent investors often lead the broader market. For example, IPI families began investing in hedge funds in the late 1990s, anticipating the wider move into hedge funds," said Mindy Rosenthal, IPI executive director.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

"We currently see three trends which are becoming increasingly important for ultra-high net-worth investors.”

These trends are global investing, investing directly in private companies and buying real, tangible assets such as commercial and residential real estate, as well as gold, land and artwork.

IPI family respondents reported they had invested nearly a third of their equity portfolios outside the United States. In 2012, nearly half say they plan to boost their holdings in global equities this year.

Fifty-five percent of IPI families say they also plan to increase direct investments in private companies this year.

"Sophisticated ultra-affluent investors increasingly have an international outlook, and are seeking potential investment opportunities in markets around the world," says Rosenthal. "And we are seeing a general movement toward owning real assets, and backing companies with real businesses, including start-ups."

However, some experts say now is a good time to scoop up U.S. stocks.

A famous market bear and a famous market bull told CNBC that global turmoil will continue to roil equities markets but investors should cherry pick good buys out there, as many stocks will prove to be better investments than U.S. government debt.

Marc Faber, the noted bear and author of the Gloom Boom & Doom report, and Jeremy Siegel, Wharton School finance professor and perennial bull, agree that with yields on U.S. Treasury bonds at rock-bottom levels, dividend-paying stocks are better bets despite market volatility, CNBC reported.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

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Tuesday, 05 June 2012 10:36 AM
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