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Alternative Market Briefing

Wealthy investors increased allocations to hedge funds in 2009

Thursday, June 24, 2010

From Komfie Manalo, Opalesque Asia:

High-net worth individuals (HNWIs), or those with investible assets of at least $1m increased their allocations to hedge funds to by 3% in 2009 (climbing to 27% compared with 24% in the previous year), according to the World Wealth Report by Merrill Lynch Wealth Management and Capgemini Consulting Technology.

The 40-page report, which covers the investment trends of global high net worth individuals (HNWI) said that holdings of HNWIs in alternative investments fell to 6% last year compared with 7% in 2008. But that did not prevented wealthy investors from putting their money into hedge funds as the industry recovered from its 2008 losses.

The report, which interviewed some 1,100 wealthy investors, showed that HNWIs from Latin America were the biggest allocators to alternative-investments. Wealthy Latin American investors account for 49% of all alternative investment holdings when the Eurekahedge Latin American Hedge Fund index rose 26.9% in 2009.

Wealthy Europeans also have significant exposures to alternatives, holding 32% of alternative investments in hedge funds last year when the Eurekahedge Europe Index returned 21.85%.

Hedge funds offer top/risk reward The decision of these wealthy individuals to raise their allocations into hedge funds is not without merit. Financial firm SEB said that hedge funds provide top/risk rewa......................

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