Wealthiest people are investing in real estate, private equity

Ultra-wealthy investors aren’t bullish on the markets but they are well positioned to “weather the storm,” according to Michael Sonnenfeldt, founder of investment club Tiger 21.

In the third quarter, Tiger 21 members moved more capital into real estate and private equity, according to its latest asset allocation report. The network, which is made up of more than 600 entrepreneurs from every industry, has $60 billion in assets.

Real estate accounts for 28 percent of its allocation, while 24 percent is in private equity.

“You want to be defensive, but in a low-risk environment you still have to take risk. So you are going to take risk where you have expertise: owning buildings, building small businesses,” Sonnenfeldt told CNBC’s “Power Lunch” on Thursday.

Members have also cut back on fixed income, only 9 percent of the club’s allocation, because of concerns about rising interest rates. It has 23 percent of its money in public equities, 5 percent in hedge funds and 10 percent in cash.

Sonnenfeldt said the members meet and try to figure out what is happening in the markets, businesses and the economy, and they’ve noted a shift from monetary policy to fiscal policy.

However, “normally when you have that shift, and the market always gets choppy when that happens, you don’t have a trillion-dollar deficit against wanting to have more infrastructure,” he added. “One or the other wins out. So when you add that and China … our members are concerned.”

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