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Ultra rich embracing hedge funds and other alternative investments, 35% more in hedge funds now (compared to 2007)

Tuesday, November 09, 2010
Opalesque Industry Update - For the richest Americans, hedge funds are back.

Despite the challenges faced by hedge funds in recent years, a full 50% of households with a net worth of $25 million or more, not including primary residence (NIPR), own hedge funds in 2010, according to "The $25 Million Plus Investor," a new report released today by Spectrem Group (www.spectrem.com).

This represents a 43% increase in hedge-fund ownership from 2007, when just 35% of the wealthiest households invested in this alternative asset class. The mean hedge fund holding for this group is $4.6 million in 2010. "While hedge funds have gotten something of a black eye in recent years, the nation's wealthiest investors have not been scared off. In fact, substantially more of them invest in hedge funds today than back in 2007, prior to the depths of the financial crisis. With their exposure to private equity and venture capital also exceeding 2007 levels, it appears the richest Americans are not afraid to accept a little risk to help expand their portfolios," said George H. Walper, Jr., president of Spectrem Group.

More than half of households worth $25 million or more own private equity (56%) and venture capital (52%) in 2010 -- up from 39% and 37%, respectively, in 2007. Other alternatives this group holds in 2010 include private placements (49%), precious metals (44%) and commodities (38%).

Spectrem's report, "The $25 Million Plus Investor," is based on a survey of the financial-decision makers in 101 households with a net worth of $25 million or more conducted by mail and online in August 2010. The data have a margin of error of plus or minus 9.7 percentage points.

(press release)

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