Individual investors appear to be comfortable with their current portfolio of US equities and often do not look outside of the market for yield. Whether a small business owner, high earning individual or retiree, very few people understand the landscape of alternative investments.
We have seen a few, like ourselves, venture into single family or residential multi-family (<4 Units) investments, yet the majority of these individual's and their financial advisors continue to seek yield in traditional ways. A recent study by Blackstone (a multinational private equity, alternative asset management and financial services firm) found only 5% of an individuals assets are allocated to alternative investments as compared to 27% and 29% of pensions and endowments. An annual study by UBS found the investment composition of Family Office’s (the private office for a family of significant wealth) to be 45%.
Institutions with the most conservative risk profile and most to lose allocate between 27%-45% of their portfolio to alternative investments
Most people only allocate 5% of our portfolio to these asset classes. It is no surprise individual investors are left behind the wealth accumulation game. While we face some obstacles in certain alternative asset classes (e.g. private equity, hedge funds, etc.) investments in real assets represents a significant opportunity for people like you and me. With direct ownership of real estate we too can build a foundation that opens the door to accessing alternative investments as we accumulate wealth. For this very reason, we like direct ownership opportunities in multi-family real estate.