Last year, many of L.A.’s wealthiest residents rode a bull market in stocks to sizable gains in their net worth. This year, other asset classes stole the show.

A lot of the smart money invested in corporate debt, as a combination of yield-seeking investors and small companies hamstrung by tighter bank regulations created a frothy market in that asset class. Some companies even borrowed money just to pay themselves a special dividend, taking advantage of a glut of lenders happy to extend them credit.

Antony Ressler (No. 35 on the list of Wealthiest Angelenos with an estimated net worth of $1.6 billion), chief executive of Century City private equity and debt giant Ares Management, has been one of the big beneficiaries of this trend. His wealth skyrocketed 40 percent as Ares’ direct-lending business – which provides relatively expensive debt to businesses that either can’t get bank loans or want to borrow more money than banks are willing to lend – continued to expand at a rapid pace. Ares paid Ressler more than $100 million in dividends in each of the last two years, and he recently agreed to lead a group to buy pro basketball’s Atlanta Hawks for about $850 million.

Bruce Karsh (No. 29, $1.89 billion) of Oaktree Capital Group, a major player in distressed debt, saw his net worth jump 9 percent.

“There was a feverish consumption of corporate debt last year,” said Andrew Crowell, president of downtown L.A. wealth manager Crowell Weedon & Co., which was founded by his grandfather in 1942.

Investors who are increasingly desperate for yield have felt pressure to go beyond the relative safety of corporate bonds into more esoteric asset classes.

“Investors are asking us, ‘Where can I get a cash return in this low-rate market?’ ” Crowell said. “They have been penalized by the Federal Reserve’s persistent low interest rate policy, or they’ve had to stretch and take on risk and explore alternatives.”

Last year, one of the hottest of those alternatives was auto loan-backed securities. Westlake Financial Services, a Mid-Wilshire auto lender owned by Don Hankey (No. 25, $2.56 billion), had packaged and sold securities derived from its auto loans for years. But 2014 was the first time the company dipped down to “BBB” credit ratings, as investors sought the higher returns those riskier subprime securities could deliver. Hankey’s net worth climbed 11 percent.

“You see more interest in the lower tranches because the yields are higher,” Westlake President Ian Anderson told the Business Journal last year.

Great leap forward

Those with significant real estate holdings, such as former Los Angeles Clippers owner Donald Sterling (No. 19, $3.42 billion) and Marion Anderson (No. 20, $3.4 billion), wife of the late John Anderson, saw their wealth surge thanks to L.A.’s white-hot property market. Valuations of both residential and commercial properties are skyrocketing, driven in no small part by foreign investors – especially those from China.

“Median home prices are rising 10 percent year over year,” Crowell said. “That’s being fueled by new money coming into the marketplace.”

A strong bond market – also driven by rock-bottom interest rates – further contributed to the reshaping of the list. Bond prices enjoy an inverse relationship with interest rates, so when rates go down, bond investments increase in value.

Patrick Soon-Shiong, L.A.’s richest man, bought $1 billion worth of California bonds in 2009 that carry a 6 percent interest rate. Not only have those bonds already spun off more than $300 million in interest, but they sell on the open market today for more than 116 cents on the dollar, which has helped push his net worth to new heights.

The bond surge also helped Jeffrey Gundlach, chief executive of downtown L.A. money manager DoubleLine Capital, make his first appearance on the list, clocking in at No. 48 with an estimated net worth of $1.2 billion.

Not only did DoubleLine’s bond funds continue to outperform almost all of their peers, but Gundlach also reaped rewards from the misfortune of another legendary bond investor, former Pacific Investment Management Co. boss Bill Gross.

Gross decamped for Denver’s Janus Capital after Pimco’s parent company, German insurer Allianz, was set to fire him in the fall. Billions of dollars subsequently flowed out of Pimco and into other fixed-income investment funds, such as DoubleLine.

And, of course, many of our newest – and youngest – billionaires benefited from a sizzling local tech industry. Five years ago, Snapchat was the way rude diners got the attention of waiters. Today, the Venice ephemeral messaging company has spun off two billionaires – and the ever-growing pool of tech startups working out of low-rise buildings in Santa Monica and Venice could create more fortunes of a similar scale.

If Crowell knows anything from his family’s history in Los Angeles, it’s to expect to be surprised as far as which businesses end up making it to the big time. And it’s a city where people are always willing to try.

“This is the place where the rest of the world looks for innovation,” he said.

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