Over the past 2 years, US investors worth $5 million or more have doubled the percentage of investable assets allocated to mutual funds, according to a study released by Spectrem Group. These Ultra High Net Worth investors have increased their mutual fund holdings to 12% of investable assets in 2005 from 6% in 2003.
Over the same period, cash deposits have increased to 13% of investable assets, from 9% in 2003, and investments in individual stocks and bonds have declined to 18% and 8%, respectively, from 20% and 10% in 2003, according to the Spectrem study, “Ultra High Net Worth 2005.”
“A fascinating phenomenon has emerged among the nation’s wealthiest investors. As financial services firms have worked to provide exciting alternative investments for their wealthiest clients, these investors have chosen to put their money into a far more time-tested vehicle: mutual funds. This, of course, points to restored confidence in mutual fund companies following the scandals of the recent past. But coupled with the move out of individual stocks and bonds and into cash, this also suggests that Ultra High Net Worth investors are still somewhat gun-shy about accepting greater risk and are managing their market exposure in a conservative way,” said George H. Walper, Jr., President of Spectrem Group.
Indeed, the percentage of investable assets Ultra High Net Worth investors are allocating to alternative investments — hedge funds, private placements, private equity and venture capital — actually fell to 8% in 2005 from 9% in 2003.