Richest Americans Reduce Exposure to Hedge Funds; Ownership Fell 29% in 2006 

image source: www.offshoreworldsl.comJust 27% of the richest Americans, with household net worth of $25 million or more, owned hedge funds in 2006, down from 38% in 2005, according to a new Spectrem Group report, “What’s in Your Portfolio?” That represents a decline of 29% in one year.

The mean balance invested in hedge funds by households with a net worth of $25 million or more was $1.6 million in 2006.  

The Ultra High Net Worth segment as a whole, representing households with a net worth of $5 million or more, saw total hedge fund exposure fall to 14% in 2006 from 17% in 2005.   

Ultra High Net Worth households altogether had a mean hedge fund balance of $739,000 in 2006.  

HNWI financial wealth worldwide is expected to reach $44.6 trillion by 2010, growing at an annual rate of 6.0%.

“Hedge fund investing appears to have lost some of its luster for the very richest Americans.  A nearly one-third decline in the percentage of those households investing in hedge funds suggests the difficulties of 2006 have made their mark.  This trend impacted the overall Ultra High Net Worth market, but no segment so significantly as the very wealthiest households.  It will be interesting to see if the industry can restore its popularity among this important segment as 2007 progresses,” said Catherine S. McBreen, Managing Director of Spectrem Group. 

What’s in Your Portfolio?” is one of five reports comprising Spectrem’s “Ultra High Net Worth Investor 2006” study.  The study was based on a mail and online survey of 526 qualified households in the United States, defined as those with a net worth of $5 million or more, not including primary residence.  Questionnaires were fielded in July 2006 and completed by the person primarily responsible for the household’s financial decisions. 

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