Although the wealthiest Americans are able to use alternative investments, they have been increasingly turning to mutual funds, according to a recent study from Spectrem Group. The research revealed that mutual fund usage has doubled from 6% of investable assets in 2003 to 12% in 2005.
"As financial services firms have worked to provide exciting alternative investments for their wealthiest clients, these investors have chosen to put their money into a far more time-tested vehicle: mutual funds," said George H. Walper Jr., president of Spectrem. "Ultra High Net Worth investors are still somewhat gun-shy about accepting greater risk and are managing their market exposure in a conservative way."
The "Ultra High Net Worth 2005" study showed that managed account investments have declined slightly, from 26% in 2003 to 23% this year. Alternative investments, including hedge funds, private placements, private equity and venture capital, have effectively held steady, going from 9% in 2003 to 8% in 2005.
Ultra high net worth investors are defined as those with $5 million or more in net worth. The study was conducted in the spring of 2005 using a mail survey that generated 500 responses.