Fewer Americans with household net worth of $5 million or more, excluding their residence, defined as the ultra-high-net-worth, owned hedge funds last year, The Wall Street Journal reports.
Those holdings hedge funds fell to 14%, down from 17% in 2005, an online survey of 526 qualified households by Spectrem Group found.
Of the richest Americans, those with $25 million or more, 27% owned hedge funds in 2006, down from 38% the year before. Of the 27%, the mean hedge fund balance was $1.6 million.
“In general, what we’re seeing is that individuals [want to make] sure they’re comfortable with their overall allocation,” said George Walper, Spectrem president. Certainly, blow-ups of hedge funds may have contributed to the hesitation. Amaranth, MotherRock, Archeus Capital and Bayou all collapsed within the past two years.
“This population of sophisticated investors is taking pause somewhat,” Walper continued. “The hedge fund sector is something they’re evaluation; they’re considering how much exposure they want. We think they’re always going to want some exposure.”