A new Spectrum Group report, “The Use of Hedge Funds and Private Equity in the Portfolios in the Wealthy,” examines investors with a net-worth of at least $5 million and determines how much of their assets they place in alternative investments, such as hedge funds. Generally considered by the public to be high-risk, hedge funds are limited to accredited investors.
According to this report, wealthy investors continue to invest in hedge funds as an alternative to the stock market, protecting their return on investment, while shielding their portfolios against the volatility of the stock market. Those who invest in alternatives are more likely than those who don’t to describe their risk tolerance as aggressive or most aggressive.
Among investors with a net-worth of $5-$25 million who own alternatives, such as hedge funds, those who consider themselves very knowledgeable about investments are more likely to own alternatives than those who don’t.
The report also revealed that hedge funds receive more money from alternative investors than any other class of alternatives, particularly those with a net-worth of $25 million or greater. 42% of investors with a net-worth of over $25 million own hedge funds and 69% of investors with a net-worth of $125 million or more are invested in hedge funds.
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