The new study titled "REITs Remain the Most Popular Alternative for UHNW Investors" says that as far as alternative investments are concerned 18% of the UHNWIs- with assets of between US$5 million and US$25 million- favored real estate investment trusts as their main alternative investment during the fourth quarter of 2011.
REITs was followed by private placements for only 9% of this investor category. Then came the 8% who favored hedge funds, 7% who favored futures, and just 2% who favored venture capital stakes. Fully one-third of all ultra-high-net-worth investors reported holding REITs in their portfolios.
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Tom Wynn, a director of affluent research at Spectrem Group, remarked, "Ultra-high-net-worth investors tend to have a pretty aggressive risk tolerance.
"They have always tended to like real estate because they are concerned about inflation and see real estate as a way of protecting against it," he added and suggested that the inclination towards real estate may be due to decline in property values.
According to the study, REITs were also in demand among the less affluent millionaire investors and investors who are not even millionaires.
Wynn explained that REITs are popular among the investors due to their high and reliable dividends, and further added that the total return for REITs has been almost double the total return for the S&P Index and the Russell 2000 Index.
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By GlobalDataIn the Specrtem survey, 33% of the UHNWIs respondents claimed to have invested in REITs because of the dividends.
Though the survey has found investors to be increasingly opting for REIT, it has also shown them as being relatively cautious about their overall investments.
Wynn said, "We’re still seeing a portion of ultra-high-net-worth investors who are in cash and fixed income, just because of the volatility of the market."
