January 18, 2007 Press Release
RICHEST AMERICANS REDUCE EXPOSURE TO HEDGE FUNDS
CHICAGO, January 18, 2007 – The very richest Americans have soured somewhat on hedge funds.
Households with a net worth of $25 million or more, not including primary residence (NIPR), reduced their exposure to hedge funds significantly in 2006. Just 27% of those households owned hedge funds last year, down from 38% in 2005, according to a new Spectrem Group report, What’s in Your Portfolio? released today.
That represents a decline of 29% in a year that brought some well-publicized challenges for the industry.
The Ultra High Net Worth segment as a whole, representing households with a net worth of $5 million or more (NIPR), saw total hedge fund exposure fall to 14% in 2006 from 17% in 2005. The decline was most prevalent among the wealthiest subset of this group, the $25 million-plus households.
“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. The mean balance invested in hedge funds by households with a net worth of $25 million or more (NIPR) was $1.6 million in 2006. For those in the $10 million-to-$25 million bracket the total was $547,000, declining to $202,000 for households with a net worth of $5 million to $10 million (NIPR). Ultra High Net Worth households altogether had a mean hedge fund balance of $739,000 in 2006.
What’s in Your Portfolio? is one of five reports comprising Spectrem’s The Ultra High Net Worth Investor 2006 study.
The five reports are:
All five are 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. The survey has a margin of error of plus or minus 4.3 percentage points.
Those interested in purchasing The Ultra High Net Worth Investor 2006 should contact Spectrem Group at (312) 382-8284 or spectrem.group@spectrem.com.
About Spectrem Group
Spectrem Group is a strategic consulting firm specializing in the affluent and retirement markets. It integrates proprietary research with expertise in building business, marketing and M&A strategies. Spectrem professionals have held senior management positions at leading global companies. Through a collaborative process, they create and implement practical and profitable strategies that fit the cultures of client firms.
