The wealthy have significantly reduced their investments in hedge funds over the past six months and they intend to further decrease them in the future, says a new study.
The research, which was conducted by wealth industry consultant Scorpio Partnership and LPEQ, a European lobby group for listed private equity companies, was based on data from firms with about $6.8 trillion (€5 trillion) in assets under management.
The study found that in the six months to November 2011, wealthy individuals reduced their allocations to hedge funds, from 58% of their total investments in alternatives in May, down to 35%.
In addition, 19% of those surveyed intend to further reduce their hedge fund allocation in the next six months.
Investments in private equity and commodities also declined in the period examined, according to the research, with the former decreasing from 11% to 5%, and the latter falling from 13% to 10%.
However, high net worth individuals have increased their investments in real estate and gold. In November, real estate accounted for 19% of wealthy individuals’ total alternative investments, up from 16% in May.
Gold, which in November represented 17% of rich individuals’ total investments in alternatives, was not even specified in May.
According to the research, 30% of those interviewed expect to decrease their allocations to gold in the next six months, while 19% expect to increase their investments in private equity.