Although many mutual fund companies pursue wealthy customers, they are likely to have a hard time winning them over, as the very wealthy in the U.S. prefer to invest in hedge funds, private equity and start-up companies, The Wall Street Journal reports.

A report from Prince & Associates found that the wealthy, those with between $500,000 and $1 million to invest, do flock to exchange-traded funds and mutual funds, with two-thirds investing in ETFs and more than half in mutual funds.

But their tastes vary widely at the $5 million to $10 million mark, with only a scant 1% investing in mutual funds and 17% in ETFs. Among those worth $20 million-plus, none invest in mutual funds and only 1% in ETFs.

Instead, among those with $20 million or more to invest, more than a third invest in start-up companies and two-thirds in hedge funds.

Why do the super-wealthy invest in start-ups? Probably because, first, they have the capital to invest and, second, they have access to information about these companies that everyday investors simply do not.

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