If you didn’t know it already, you do now: rich families love hedge funds. Why? Because a survey by LJH Global Investments, the hedge fund advisory firm, and the Institute for Private Investors (IPI), an educational and networking organization for families with substantial assets and their advisors, found that 37 percent of high net worth family respondents currently invest in alternative investments, including hedge funds, private equity, illiquid investments, and venture capital. Better still, 53 percent of IPI ‘ s investor members plan to increase their hedge fund investments in 2003.
Additional findings show that IPI investors have an average of 18 percent of their individual asset allocations in hedge funds, as compared to 34 percent in equities and 20 percent in fixed income, and include an average of 12 managers.
Hedge funds should be considered as their own asset class, according to 37 percent of respondents, with an additional 40 percent reporting that certain hedge fund strategies should be considered as a separate asset class. Another 16 percent of respondents think of hedge funds as part of the equity allocation.
Nearly half (49%) of the investors surveyed make use of a fund of hedge funds manager or consultant, the survey showed. The majority of respondents said that they are very satisfied with the calibre of advice they receive from their advisors.
“Hedge funds have increased in popularity in recent years as investors seek better returns yet geopolitical concerns and a sluggish economy have restricted recent growth,” says James R. Hedges, IV, President and Chief Investment Officer of LJH Global Investments. “These new survey findings show that investors remain confident in the ability of hedge funds to provide absolute returns in an uncertain market.”
Founded in 1992, IPI membership requires that a family or individual have investable assets in excess of US$10 million. Four out of ten members oversee US$200 million or more, and one third manage $50-200 million, and IPI currently has 665 individual members representing 300 different families. LJH has supported IPI as a Leaders Council member since 1995, and examines the survey’s hedge fund data in partnership with the Institute.
The latest Family Tracking Performance Survey* is based on 71 member family responses, which represents 24 percent of IPI ‘s membership.
LJH Global Investments, LLC was founded in 1992 by James R. Hedges, IV to manage private assets, and has rapidly developed into a leading industry specialist in hedge fund investment consulting and advisory services. LJH has advised numerous private investors, financial institutions, and registered investment advisers on the development of fund of hedge funds strategies.