Hedge fund and other alternative investments increase with wealth, says Spectrem report
Wealthy investors continue to invest in hedge funds as an alternative to the stock market, seeking greater return on investment while shielding their portfolios against the volatile nature of stocks and bonds trading.
That’s according to Spectrem Group's latest Perspective report – Use of Hedge Funds and Private Equity in the Portfolios of the Wealthy – which examines the ownership and sourcing of hedge fund investments, as well as the use of private equity in investing. The report concentrates on investors with a net worth over USD5 million.
The Perspective includes key findings about hedge fund and alternative investments, including:
• The average investment for the USD25 million investor ranges from USD3.5 million for private placements to USD12.6 million for hedge funds.
• Ownership of alternatives increases with an increase in wealth and decreases with increasing age.
• Hedge funds receive more money from alternative investors than any other class of alternatives, particularly from those with a net worth of USD25 million or more.
• While 42 per cent of investors with a net worth over USD25 million own hedge funds, 69 per cent of investors with a net worth of USD125 million or more are invested in hedge funds.
"Utilisation of alternative investments increases as wealth increases, and advisors should recognise the opportunity to introduce alternative investments as an investor's net worth grows," says George H Walper, Jr, president of Spectrem Group. "Investors who find alternatives attractive are looking for a higher rate of return and a diversified portfolio of investments."