Investors increasingly view alternative investments, including hedge funds and real estate, as a safe investment due to their low correlation with the stock market, according to the 2003 World Wealth Report, published by Merrill Lynch and Cap Gemini Ernst & Young.

Last year, high-net-worth individuals invested 10% of their assets in alternative investments, according to the report. "However, the [greater] the wealth, the greater the proportion of alternative investment products in the portfolio," said James Gorman, president of Merrill Lynch’s global private client group. "This report highlights the need for diversified asset allocation. It is one way that high-net-worth individuals have been able to maintain their wealth during volatile markets."

Subscribe Now

Access to premium content including in-depth coverage of mutual funds, hedge funds, 401(K)s, 529 plans, and more.

3-Week Free Trial

Insight and analysis into the management, marketing, operations and technology of the asset management industry.