<story><title>How the 0.001% invest</title><url>https://www.economist.com/leaders/2018/12/15/how-the-0001-invest</url></story><parent_chain><item><author>Gustomaximus</author><text>A friend of mine who manages ultra wealth people said most people who turn up don&amp;#x27;t say &amp;quot;How much can you make me&amp;quot; but say &amp;quot;Can you make sure I&amp;#x27;m never poor&amp;quot;.&lt;p&gt;It&amp;#x27;s often about preservation of wealth more than gains for these people.&lt;p&gt;That said I&amp;#x27;ve discussed some returns they make and it&amp;#x27;s incredible. I don&amp;#x27;t want to say what I recall, as it was a couple years back and it sounds like an exaggeration. They said this is partly because they get access to deals that don&amp;#x27;t hit the wider market and you need serious cash to get in the room to have that chat. And I guess these manager have a bunch of the right people attached to them so it makes an easy stop.</text></item><item><author>mruts</author><text>I&amp;#x27;ve seen the portfolio&amp;#x27;s of dozens of family offices (I worked at a portfolio analytics company so I had free reign to snoop around), and none of the offices seemed competent. The returns were terrible and the portfolio construction laughable.&lt;p&gt;Instead of striving for out performance, the funds just catered to the whims and idiosyncrasies of the family. Also, many of these funds were too small to make sense, AUMs from like 150MM-500MM. They would have be much better off just investing in a hedge fund, but the family&amp;#x27;s ego didn&amp;#x27;t allow them. I think the point was to show off more than anything else.&lt;p&gt;One of the exceptions was Sergey Brin&amp;#x27;s family office, which managed a shit-ton of money and had some good people who actually knew something about portfolio construction.</text></item><item><author>potatofarmer45</author><text>I&amp;#x27;ve worked for a family office in Hong Kong. What was really telling for me was how the rate of return KPI was measured. We were not benchmarked against the S&amp;amp;P 500, or any index. We were measured directly against the fund of another frenemy family. So long as the fund outperformed the other family, all was good. It&amp;#x27;s crazy because you could be underperforming treasury bonds, and still be good because the other office was worse.&lt;p&gt;I guess when you that much money, more money means less than vanity and bragging rights.</text></item></parent_chain><comment><author>savanaly</author><text>&amp;gt;They said this is partly because they get access to deals that don&amp;#x27;t hit the wider market and you need serious cash to get in the room to have that chat.&lt;p&gt;This is something I hear a lot and I just don&amp;#x27;t get. Are the people on the other side of those deals just...not greedy? After all, you are implying that the deal has better expected returns than what people are buying on margin in public markets, so why doesn&amp;#x27;t the person on the other side of the deal take a little more for themselves by selling there instead (at a slightly more favorable interest rate)?&lt;p&gt;Is it because the rich investors are needed to bring some level of expertise or connections to the investment to make it work? If that&amp;#x27;s the case, and it seems likely, I would not say they are getting &amp;quot;access to better deals&amp;quot; per se. More like they are getting a normal rate of return and they have a valuable asset that they are renting out as well (their expertise or connections), and it all gets rolled into one number. But complaining about the rich having valuable assets is different from complaining about them having access to better investment opportunities.</text></comment>
<story><title>How the 0.001% invest</title><url>https://www.economist.com/leaders/2018/12/15/how-the-0001-invest</url></story><parent_chain><item><author>Gustomaximus</author><text>A friend of mine who manages ultra wealth people said most people who turn up don&amp;#x27;t say &amp;quot;How much can you make me&amp;quot; but say &amp;quot;Can you make sure I&amp;#x27;m never poor&amp;quot;.&lt;p&gt;It&amp;#x27;s often about preservation of wealth more than gains for these people.&lt;p&gt;That said I&amp;#x27;ve discussed some returns they make and it&amp;#x27;s incredible. I don&amp;#x27;t want to say what I recall, as it was a couple years back and it sounds like an exaggeration. They said this is partly because they get access to deals that don&amp;#x27;t hit the wider market and you need serious cash to get in the room to have that chat. And I guess these manager have a bunch of the right people attached to them so it makes an easy stop.</text></item><item><author>mruts</author><text>I&amp;#x27;ve seen the portfolio&amp;#x27;s of dozens of family offices (I worked at a portfolio analytics company so I had free reign to snoop around), and none of the offices seemed competent. The returns were terrible and the portfolio construction laughable.&lt;p&gt;Instead of striving for out performance, the funds just catered to the whims and idiosyncrasies of the family. Also, many of these funds were too small to make sense, AUMs from like 150MM-500MM. They would have be much better off just investing in a hedge fund, but the family&amp;#x27;s ego didn&amp;#x27;t allow them. I think the point was to show off more than anything else.&lt;p&gt;One of the exceptions was Sergey Brin&amp;#x27;s family office, which managed a shit-ton of money and had some good people who actually knew something about portfolio construction.</text></item><item><author>potatofarmer45</author><text>I&amp;#x27;ve worked for a family office in Hong Kong. What was really telling for me was how the rate of return KPI was measured. We were not benchmarked against the S&amp;amp;P 500, or any index. We were measured directly against the fund of another frenemy family. So long as the fund outperformed the other family, all was good. It&amp;#x27;s crazy because you could be underperforming treasury bonds, and still be good because the other office was worse.&lt;p&gt;I guess when you that much money, more money means less than vanity and bragging rights.</text></item></parent_chain><comment><author>cik</author><text>I deal with multiple folks who have them. This is the real goal, though tongue-in-cheek. Ultimately they want monies to increase as the family logically increases in size.</text></comment>