WEST PALM BEACH, FL (www.hedgeco.net) – Merrill Lynch�s new report says the world�s high-net-worth individuals are cooling off their appetites for hedge funds, the report shows that, �the world’srich have become increasingly cautious with their investments.� However the report also noted that the wealth of the world�s rich individuals, {those with at least $1million in their financialholdings} would rise by a compounded rate of 6.5 percent between 2004 and 2009. Such growth will bring the total wealth of the world�s most affluent to a total of $42.2 trillion according to the newsurvey. The new report was compiled by Merrill Lynch in conjunction with Capgemini.
Last year�s report projected that the wealth of the world�s high-net-worth individuals will increase by 7 percent, but recent increases in oil prices along with tighter monetary policies are expected to put additional pressure on the level of such growth. The report also noted that rich investors will continue to diversify their holdings, but of lesser levels into hedge fund managed portfolios. Hedge funds have benefited from investments by the high-net-worth individuals who were largely responsible for the exponential growth, which has occurred in hedge funds over the years.
Richard Turnill, chief investment officer of discretionary business at Merrill Lynch, said, �That while investments by the affluent into hedge funds may decline, nevertheless, such investors are not expected to flee from the hedge fund sector.� Turnill said, �We are seeing some pullback from hedge funds … that is more about the rate of growth than funds being pulled out.�
The numbers of the high-net-worth individuals investing in hedge funds, grew by 7.3 percent last year to 8.3 million people, according to the report. The new survey also noted that, �The fastest region for growth of wealthy individuals’ holdings is the Middle East, seen rising by 9.1 percent between 2004 and 2009, followed by North America, up by 8.4 percent; and Asia-Pacific, up by 6.9 percent; while Europe lags at a rise of 3.8 percent.�
Today, investments coming from pension funds and endowments are expected to continue to boost the assets of hedge fund managers. Institutional investors are gradually replacing high-net-worth individuals as the next wave of hedge fund investors. Declining returns from equity and bond portfolios are forcing institutional managers to seek alternative ways of seeking investment returns.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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