The
super-rich
have
a
very
different
mindset
toward
investing
than
the
average
person,
wealth
manager
Robert
Fraser
says.
“Most
people
focus
exclusively
on
public
markets
and
have
a
60/40
mindset
towards
investing
—
where
60%
of
their
funds
are
in
equities
and
40%
is
in
fixed
income.
Billionaires
don’t
think
that
way,”
the
co-founder
and
CFO
of
the
U.S.-headquartered
Aspen
Funds,
told
CNBC
Pro
on
July
3.
Fraser,
whose
firm
serves
ultra-high-net-worth
and
high-net-worth
individuals around
the
world,
manages
over
$500
million
through
his
Aspen
Funds.
He
says
the
wealthy
are
constantly
thinking
about
how
to
put
their
money
to
work.
“Billionaires
have
a
balance
sheet
mindset.
They’re
looking
to
grow
their
net
worth
by
multiplying
their
assets
and
reducing
their
liabilities.
They’re
very
focused
on
their
net
worth.
The
average
investor
has
an
income
statement
mentality
focusing
on
earnings
and
seeing
their
to
investments
as
a
safety
net.”
The
global
billionaire
population
is
on
the
rise,
with
2,781
making
the
cut
this
year
—
141
more
than
in
2023,
according
to
Forbes
,
which
noted
that
they’re
also
richer
than
ever,
worth
an
aggregate
of
$14.2
trillion
—
$2
trillion
more
than
in
2023.
Portfolio
allocation
The
strategy
of
the
ultra-rich
differs
based
on
an
individual’s
investable
funds,
Fraser
said,
revealing
how
individuals
with
around
$1
million
and
$10
million
and
$100
million
to
invest
typically
allocate
their
funds:
What’s
consistent,
however,
is
that
a
larger
proportion
of
investments
is
in
alternatives.
That’s
because
they
have
“lower
volatility
than
public
markets,
higher
returns,
liquidity
discounts,
better
tax
incentives
and
are
uncorrelated
to
stock
markets,”
Fraser
explained.
Alternative
investments
are
assets
that
do
not
fall
into
the
conventional
categories
of
stocks,
bonds,
commodities
and
cash.
They
include
real
estate,
private
equity,
venture
capital,
private
debt,
hedge
funds,
futures,
cryptocurrencies
—
and
even
collectors’
items
like
art,
jewelry
and
watches.
The
returns
are
attractive
too,
Fraser
added,
referencing
the
performance
of
the
Yale
Endowment
Fund
,
which
invests
around
half
of
its
funds
in
alternatives.
It
yielded
“13.1%
returns
at
a
time
in
2023
when
the
standard
60/40
portfolio
returned
8.8%,”
he
said.
Fraser
named
real
estate
as
another
asset
class
the
ultra-rich
like,
with
many
owning
properties
and
earning
rental
income.
Gains,
he
said,
are
also
generated
when
properties
are
sold
and
the
the
profits
are
reinvested
into
other
properties.
“Billionaires
love
real
estate
—
it
brings
benefits
to
owners
like
growth
through
inflation,
depreciation,
tax-deferral
and
long-term
capital
gains,”
Fraser
added.
‘Turn
your
money
from
soldiers
to
an
army’
When
asked
how
the
average
investor
can
incorporate
some
of
these
strategies
when
building
their
portfolios,
the
wealth
manager
replied:
Determine
your
liquidity
premium
for
the
next
year
and
put
that
amount
into
equities
and
fixed
income.
He
suggests
that
the
remaining
funds
be
channeled
into
real
estate
—
starting
with
single
family
residences
and
eventually
diversifying
into
industrial
properties,
multi-family
residences
and
retail
real
estate.
He
added
that
investors
can
consider
pooling
funds
with
friends
or
family
if
they
face
difficulties
buying
a
property
on
their
own.
“It
is
good
for
the
average
investors
regardless
of
whether
they
are
accredited
to
be
in
real
estate.
As
their
wealth
increases,
they
can
invest
in
private
equity
and
maybe
even
venture
capital
or
hedge
funds
like
the
ultra-wealthy,”
Fraser
said.
“The
most
important
thing
to
do
in
this
process,
is
to
figure
out
how
to
turn
your
money
from
soldiers
to
an
army
that
can
work
for
you,”
he
added.
