Investors Satisfied With Hedge Fund, Alts. Investments

Jul 29 2008 | 11:19am ET

A new investor survey conducted by Bank of America is sure to bring smiles to the faces of a few hedge fund managers.

High net-worth individuals with alternative investments expressed greater satisfaction over the last 12 months with every category of alternatives, including hedge funds, venture capital, real estate and private equity, than with their more traditional investments.

Specifically, 57% of wealthy Americans who invest in hedge funds expressed satisfaction since their initial investment, with only 5% expressing dissatisfaction. When asked to describe their perceived level of risk for certain investments over the next five years, 54% of investors in alternatives viewed hedge funds carrying risk, while only 17% perceived risk around stock mutual funds.

Nearly six in 10 wealthy individuals surveyed said they are more likely to invest in a hedge fund that is registered with the Securities and Exchange Commission than a non-registered fund. And close to half of investors in any type of hedge fund instrument also said they are more likely to invest in an SEC-registered hedge fund.

Some 48% of the 400 respondents and 51% of those invested in hedge funds said they were more likely to invest in a hedge fund that has been carefully screened. Just 24% of respondents and 18% of those invested in hedge funds did not believe third-party screening was important.

"Our study demonstrates that, despite the portrayal of hedge fund investors as risk-takers investing in aggressive managers, many high net-worth investors have a realistic understanding of the risks associated with their holdings and realize that large alternatives managers are institutional in their investment approach and the quality of their investment professionals," said David Bailin, president, Bank of America Alternative Investment Solutions.

Negative stories published about hedge funds appear not to have deterred experienced hedge fund investors, according to the survey's findings. When asked if negative publicity about the industry impacted their investment decisions, 44% of those invested in hedge fund vehicles said “no” and only 20% said “yes.”

Bailin said the majority of respondents with investments in hedge fund vehicles said that they are not deterred by the possibility that they will lose more money than they can afford to by investing in such funds, and only 10% said they were afraid.

Respondents to the survey were high net-worth investors with more than $3 million in investable assets. Of the survey respondents, 267 held investments in alternatives overall, including 92 in hedge funds or funds of hedge funds.


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.