Wealthy clients want commodities, real estate

Wealthy investors now favour commodities and real estate, says the Institute for Private Investors’ 13^th annual Family Performance Tracking survey.

Almost half (45%) have increased their allocation to commodities, while 31% have upped their exposure to real estate, and 22% to private equity. Investors also bought municipal holdings and decreased hedge fund investment.

Read: Commodity investing: no longer straight up

“This year’s data reinforced the investment trends we have been seeing among the ultra-affluent, such as the popularity of direct investment in private companies,” says Mindy Rosenthal, IPI executive director.

She adds, “Families remain concerned universally about risk, both abroad and at home.”

Other key findings included:

• 70% of families are concerned about geopolitical risk and domestic policy shifts
• 48% say they worry about finding opportunities for yield
• 62% employed an advisor, an all-time high from past surveys
• Half of families say they’re staying the course and sticking to their portfolios
• Families’ returns for 2011 varied widely, from -10% to 25.1%, net of fees

The majority of respondents reported returns of between -2.16% and 2.28% net of fees. The five-year average was 2.40% net of fees.

Wealthy families who sought principal protection fared better; almost two-thirds saw positive returns.

Read: Family offices retool after recession

The Family Performance Tracking survey is conducted in two parts, and reports on the expectations, returns and asset allocations of families. Data released earlier this year looked at their anticipated investment strategies, while this second installment measured wealthy investors’ actual allocation and performance.