Do it yourself: The wealthy are increasingly looking to invest directly

The rich are looking to follow the family office model championed by billionaire families

New York Weekend Edition /
Sep.September 23, 2018 10:00 AM

(Credit: Pixabay)

Billionaire families like the Dells and the Pritzkers know that the smart way to put their money to work is by investing directly. And now your average centimillionaire is catching on.

Instead of going through hedge funds, private equity and other traditional investment platforms, rich people are increasingly looking to “go direct” by investing their money straight into a business, Bloomberg News reported.

“Some wealthy people don’t like being in investment pools where they don’t have a say,” explained Cascadia Capital managing director Felix Herlihy. “The thinking is by going direct their performance over time will be superior. In a way, it’s saying, ‘I’m a little bit smarter.’”

Some investors are looking to get an early look at deals that haven’t already been picked over.

“There’s a ton of money out there still waiting to be deployed,” said Michael Tiedemann, chief executive officer of Tiedemann Wealth Management. “If the deal has reached your desk, and it is not an industry that you were an operator in, chances are it has been looked over and passed on by those who know much more about the competitive landscape than you.”

At a gathering in the Hamptons last month, a group of roughly 630 individuals with at least $10 million to invest known as Tiger 21 were discussing going direct, or do-it-yourself investing.

Tiger 21 investors increased their exposure to alternative investments like private equity, which accounted for 23 percent of their investments in the second quarter, according to CNBC. That was up from 21 percent in the previous quarter.

But at the same time they’ve scaled back investments in assets like real estate, thanks to concerns over the “retailpocalypse,” rising interest rates and falling real estate prices.

Real estate accounted for 30 percent of their portfolio in the first quarter of the year, but by the second quarter it had fallen to 27 percent, according to CNBC. [Bloomberg, CNBC] – Rich Bockmann


Related Articles

arrow_forward_ios
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
Real estate stocks push up this week as U.S.-China trade tensions ease
416 West 25th Street and Maverick Real Estate Partners principal David Aviram (Credit: Google Maps and LinkedIn)
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Chelsea landlord claims “predatory” lender is charging a crippling interest rate as punishment after losing foreclosure case
Gov. Andrew Cuomo (Getty, iStock, NY State Budget)
Cuomo proposes tax credits for restaurants, income tax increases
Cuomo proposes tax credits for restaurants, income tax increases
Cindat Capital Management CEO Greg Peng and Hersha Hospitality Trust CEO Jay Shah with 51 Nassau Street (Google Maps)
7 Manhattan hotels head to auction block
7 Manhattan hotels head to auction block
Damien Dwin of Lafayette Square Holding (Photos via Lafayette; iStock)
Sustainable housing is focus of Damien Dwin’s social justice effort
Sustainable housing is focus of Damien Dwin’s social justice effort
Clockwise from top left: 48 Bedford Avenue in Williamsburg; 7601 4th Avenue in Bay Ridge; 55-25 58th Street in Maspeth; 42, 44 and 46 21st Street in Flatiron; 59-20 Van Doren Street in Corona (Photos via StreetEasy; Google Maps)
Mid-market investment sales off to strong start in 2021
Mid-market investment sales off to strong start in 2021
(Getty, iStock)
Flooding caused by climate change leads to mounting real estate costs
Flooding caused by climate change leads to mounting real estate costs
Mickey Rabina and 520 Fifth Ave. (Rabina, Ceruzzi Properties)
Rabina files plans for 70-story tower at beleaguered Fifth Ave site
Rabina files plans for 70-story tower at beleaguered Fifth Ave site
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...