Ultra Wealthy Hedge Funds

Ultra Wealthy Hedge Funds

Half of Ultra Wealthy Households Invest in Hedge Funds

The ultra wealthy have grown to embrace hedge funds as an attractive investment. A new study by Chicago-based Spectrem Group found that half of the ultra-high-net-worth households it surveyed were invested in hedge funds. Despite concerns over alternative investments in the last couple of years, it seems that many ultra wealthy individuals still value the potential reward over the potential risks.
Half of the ultra-high-net worth households that it surveyed earlier this year own hedge funds. The means holding was $4.6 million. That level of ownership represents a 43% increase in the hedge fund ownership from 2007, when just 35% of the wealthiest households invested in that asset class, according to Spectrem, which released its report on Tuesday. Spectrem fielded questions to 136 wealthy households in August for the study, called “The $25 Million-Plus Investor”.

This wealth segment is not just going after hedge funds. More than half, 56%, of households worth $25 million or more own private equity, and 52% of them hold venture capital. Those holdings represent increases from 39% and 37%, respectively. They also hold private placements, 49%, precious metals, 44%, and commodities, 38%. In terms of the distribution of investable assets, alternatives comprise about 20% of overall holdings in an ultra wealthy client’s portfolio. Stocks and bonds made up 20%; professionally managed accounts had 16%; mutual funds and deposit accounts each had 11%; other investments accounted for 14%, and rollover contributory and Roth IRAs had 9%. Source

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