Savvy wealthy to invest in Commodities, reduce cash

Wealthy investors plan to increase their cash allocations to commodities, and private companies while decreasing their cash holdings this year, according to a survey released Friday.

About 48% of respondents said they plan to add to commodities investments during Y 2012 and 55% said they intend to make more direct investments in private companies, according to a survey by the Institute for Private Investors.

About 45% plan to increase real-estate holdings, said IPI's survey of its members, who are families with at least US$30-M in investable assets.

It's part of that whole movement toward actually owning real assets, Mindy Rosenthal, executive director of IPI, said in a telephone interview. They are looking at going back to the Old School way of making money.

The Dow Jones-UBS Commodity Index (DJUBS) fell 13.4% in Y 2011, according to data compiled.

Real estate investment trusts returned 8.1% last year, according to the Bloomberg REIT Index (BBREIT) of 129 publicly traded property owners. Most REITs are publicly traded companies that own and operate property including apartments and office buildings.

Commodities and agricultural real-estate may be attractive ways to benefit from growth and rising standards of living in emerging markets Wealthy investors will increase their cask allocation to real estate, commodities and Crude Oil and Nat Gas pipelines by as much as 4% through investments in private equity and stocks in the next year.

About 36% of survey respondents said they will decrease cash holdings this year. That may be because some families see market volatility as a buying opportunity.

IPI members, who were questioned in November, said they expected their portfolios to return 4.9% on average for Y 2011.

Wealthy families surveyed said they anticipate the Standard & Poor's 500 Index (SPX) will return 6.4% on average this year. The index returned 2.1% including dividends during Y 2011, according to data compiled.

About 70 individuals representing 70 families responded to IPI's online survey of its 345 member families.

About 91% of IPI's members reside in the USA. New York-based IPI provides education and networking for its members.

Paul A. Ebeling, Jnr.

Paul A. Ebeling, Jnr

Paul A. Ebeling, Jnr. writes and publishes The Red Roadmaster's Technical Report on the US Major Market Indices, a weekly, highly-regarded financial market letter, read by opinion makers, business leaders and organizations around the world.

Paul A. Ebeling, Jnr has studied the global financial and stock markets since 1984, following a successful business career that included investment banking, and market and business analysis. He is a specialist in equities/commodities, and an accomplished chart reader who advises technicians with regard to Major Indices Resistance/Support Levels.