The lifestyles of the ultra-wealthy are very different, and their investment portfolios differ greatly from those of the typical investor.

“Although there isn’t a set cutoff point, joining the 0.001% club can be achieved by centimillionaires or those with a net worth exceeding $100 million,” stated Kevin Teng, CEO of WRISE Wealth Management Singapore, a wealth management company catering to the highest net worth individuals.

Based on data from WRISE, there are approximately 28,420 centimillionaires in the world. They are primarily located in Beijing, New York City, the Bay Area, Los Angeles, and London.

In the United States, purchasing an NFL team entitles you to become a knighthood.

“These cities boast robust financial infrastructure, vibrant entrepreneurial ecosystems, and lucrative real estate markets, making them attractive destinations for the ultra-wealthy,” Teng told CNBC.

Furthermore, according to Teng, this group of people that “epitomises extreme wealth” is picky about their investments.

“They don’t invest in get rich, quick things, illiquid things today. For example, that means they don’t really do publicly traded equities,” said Salvatore Buscemi, CEO of Dandrew Partners, a private family investment office.

“They actually don’t even invest in crypto, believe it or not,” Buscemi told CNBC. “What they’re looking for is to preserve their legacy and their wealth.”

Real estate

Consequently, “very strong, stable pieces of real estate” are a common element of centimillionaire portfolios, according to Buscemi. These affluent people have a preference for Class A properties, sometimes known as “trophy assets,” which are investment-grade properties that were usually constructed within the last 15 years.

Real estate often makes up 27% of the portfolios of ultra-high net worth investors and entrepreneurs, according to Michael Sonnenfeldt, the founder and chairman of Tiger 21. Sonnenfeldt spoke with CNBC about this phenomenon.

Family offices as investment vehicles

According to Andrew Amoils, an analyst at the international wealth intelligence organisation New World Wealth, people with this kind of wealth typically have their money managed by single family offices, which take care of everything from their inheritance to household bills, credit cards, immediate family costs, etc.

According to Amoils, “these family offices frequently have venture capital arms that invest in high growth startups and foundation arms for charities.”

With 4,500 family offices globally last year and an estimated $6 trillion in assets under administration, the number of family offices has tripled since 2019.

Alternative investments?

According to Dandrew’s Buscemi, extremely wealthy people may also consider investing in professional sports franchises.

He stated, “It takes a lot more than just money to get into that group—it’s an extremely insulated group.”

According to Buscemi, a big draw for these affluent folks is exclusivity since they prefer to socialise with like-minded individuals. According to him, these people use their ownership of a sports team as a means of establishing their legitimacy.

“Purchasing an NFL team in the United States bestows knighthood upon you,” he remarked, citing the 1989 purchase of the Dallas Cowboys by American billionaire Jerry Jones.

Teng of WRISE also observed that 0.001% of people focus more on alternative investments, private credit, and fixed income. According to him, investors are turning to private loans more frequently as they look for returns outside of traditional markets.

According to Teng, “this trend reflects a growing appetite for non-traditional assets that offer unique risk-return profiles.” Venture capital, private equity, and real assets are examples of alternative investments.

(Adapted from CNBC.com)