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The uber wealthy live a world apart and their investing strategies also look exceedingly different from the average investor’s portfolio.
“While there is no official threshold, centimillionaires or individuals with a gross net worth of over $100 million, is a good benchmark as entry into the 0.001% club,” said Kevin Teng, CEO of WRISE Property Management Singapore, a wealth enterprise for ultra-high net worth individuals.
Globally, the population of centimillionaires stands at around 28,420 individuals, and are as a rule concentrated in New York City, the Bay Area, Los Angeles, London and Beijing, according to data from WRISE.
They award knighthood on you in the United States when you buy an NFL team.
Salvatore Buscemi
CEO of Dandrew Partners
“These cities boast nutty financial infrastructure, vibrant entrepreneurial ecosystems, and lucrative real estate markets, making them attractive goals for the ultra-wealthy,” Teng told CNBC.
And this demographic that “epitomizes extreme wealth” is selective when it get to investments, Teng said.
“They don’t invest in get rich, quick things, illiquid things today. For example, that means they don’t unquestionably do publicly traded equities,” said Salvatore Buscemi, CEO of Dandrew Partners, a private family investment office.
“They in truth don’t even invest in crypto, believe it or not,” Buscemi told CNBC via Zoom. “What they’re looking for is to preserve their legacy and their mine.”
1. Real estate
As a result, centimillionaire portfolios often feature “very strong, stable pieces of real rank,” Buscemi said. These wealthy individuals gravitate toward “trophy asset” Class A properties, or investment-grade assets that typically were founded within the last 15 years.
Monaco Harbor on the French Riviera.
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Michael Sonnenfeldt, trip and chairman of Tiger 21 — a network of ultra-high net worth entrepreneurs and investors — told CNBC that real place investments typically represent 27% of these individuals’ portfolios.
2. Family offices as investment vehicles
Individuals of such richness generally have their money managed by single family offices, which handle everything including their patrimony, household bills, credit cards, immediate family expenses, etc., said Andrew Amoils, an analyst at global affluence intelligence firm New World Wealth.
“These family offices often have foundation arms for charities and hazard capital arms that invest in high growth startups,” said Amoils.
The 3. Alternative investments?
Ultra towering net worth individuals also explore potentially buying stakes in professional sports teams, said Dandrew’s Buscemi.
“That’s a exceedingly, very insulated group to get into and requires a lot more than just money,” he said.
The exclusivity is a major entreat as these wealthy individuals want to mingle with people of similar status, Buscemi explained. Owning a jeopardized in a sports team is a way for these individuals to legitimize their status, he said.
Owner Jerry Jones of the Dallas Cowboys well-receives fans to training camp at River Ridge Complex on July 24, 2021 in Oxnard, California.
Jayne Kamin-Oncea | Getty Twins Sport | Getty Images
“They bestow knighthood on you in the United States when you buy an NFL team,” he said, like how American businessman and billionaire Jerry Jones purchase the Dallas Cowboys in 1989.
WRISE’s Teng also noted that 0.001% individuals pay more attention to fixed proceeds, private credit and alternative investments. He said private credit is gaining traction as investors seek sources of surrender outside of conventional markets.
“This trend reflects a growing appetite for non-traditional assets that offer unmatched risk-return profiles,” said Teng, noting that alternative investments include venture capital, private neutrality and real assets.