Overall, 42% of ultra-wealthy investors with a net worth of $25m or more invest in hedge funds and this percentage increases as wealth increases; however, decreases as investors get older.
There are different types of hedge funds, and investors who place their funds in hedge funds often take advantage of those differences to increase their return on investment.
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
Spectrem’s Perspective, Use of Hedge Funds and Private Equity in the Portfolios of the Wealthy, examines the alternative investment behaviors of investors with a net worth of $25m or more, who are most likely to employ hedge funds and alternatives for portfolio growth.
Of those investors who do invest in hedge funds, 34% invest in long/short hedge funds, and 29% make investments in registered funds or liquid hedge funds.
One-quarter of wealthy investors place investments in market neutral hedge funds and 23% place funds in event-drive hedge funds.
All of those funds have different rates of return and fluctuate independent of each other. For that reason, most investors place funds in more than one hedge fund, acting as a "hedge” against one fund failing to perform up to expectations.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataFor instance, 19 percent of investors who invest in hedge funds own six or more hedge funds. Only 18 percent have only one hedge fund. A majority of investors who access hedge funds have at least three funds in their portfolio.
While the mean number of hedge funds owned by investors with a net worth over $25m is four, professionals average more than six funds each, and investors under the age of 55 average 4.6 funds.
Fifty-seven percent of investors under the age of 56 have funds in hedge funds, but that percentage drops to 39% of investors between the ages of 56 and 65, and down to 30% among investors over the age of 65.
