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Wealthiest Investors Skittish on Strength of Recovery

The wealthiest investors are still “very nervous” about the strength of the economic recovery, the director of a leading investment group told CNBC Friday.

However, the ultra-rich have been slowly switching from cash and into stocks because it gives them more liquidity, said Michael Sonnenfeldt of New York-based Tiger21.

“Their worst fears are over,” said Sonnenfeldt, “but they still have a lot of cash (than normal.) They are still very cautious.”

Concerns about the US and global economies remain high for the group, which manages about $10 billion in assets. Gold, foreign currencies and emerging markets have increased in many portfolios, Sonnenfeldt said.

“A lot of them still think the American system is the best world,” Sonnenfeldt said, “but it doesn’t mean a deficit of $12 trillion isn’t a concern.”

Today’s wealthy investors have significantly lowered their expectations for returns. “If they could beat inflation by 2 percent-3 percent, they would be golden, but I’m not sure they can do that,” Sonnenfeldt said.