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APA’s philosophy is to work closely with our clients to develop an in-depth understanding of their unique needs and objectives. We then customize a municipal bond portfolio that best meets their specific goals and needs. APA manages high quality municipal bond portfolios in four strategies: Short-Term, Intermediate-Term, High Income, and Taxable.

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Alternatives Provide Returns Required by the Ultra Wealthy

In the past 5 years, America's wealthiest investors have increased the number of alternatives held in their portfolios. Learn more about why they find these investments attractive.

| BY Catherine McBreen

In 2007, 16 percent of the portfolios of the wealthiest Americans were invested in alternative investments, but in 2012, 25 percent of their portfolios consist of alternatives according to research recently released by Millionaire Corner and Spectrem Group.  The research was conducted with 201 households with more than $25 million of net worth (not including their primary residence) in June through August of 2012.  Why the high percentage of alternative investments?

“One of the primary reasons that the wealthy are investing in alternatives is because of their expectations for high returns, “ according to George H. Walper, Jr., President of Spectrem Group.  The research shows that more than 60 percent of the $25 million plus households are looking for annual rates of return over 9 percent.  In fact, 11 percent of these investors are looking for greater than 25 percent returns. Sixty four percent of these households feel it is important than their returns are better than the stock market in general.

Fifty five percent of the households in this wealth segment are invested in Private Equity and forty seven percent own hedge funds.  Another 45 percent own venture capital.  Overall, most of these investors own various types of alternative investments from hedge funds, to commodities, to limited partnerships, collateralized debt obligations and others.  Of those invested in hedge funds, more than forty percent own 3 or more hedge funds.

“These wealthy investors are able to more effectively manage the risk than other households because, quite frankly, they have the assets to provide their own safety net,” says Walper.  In contrast to their wealth, 55 percent indicate it is more important to protect their principal than grow their investments.

And what will these wealthy investors be investing in during the next twelve months?  More than 25 percent are interested in each of the following types of alternatives: hedge funds, private equity, and venture capital.  Yet for many of the ultra wealthy, in fact 62 percent, they plan to invest in individual stocks.  And for the ultimate diversification, 43 percent plan to invest in money market funds and checking/savings accounts.

About the Author

Catherine McBreen

Catherine S. McBreen is President of Millionaire Corner.  McBreen plans and develops content for Millionaire Corner.  Catherine balances editorial content to meet the informational needs of both new and seasoned investors.  She designs special monthly surveys on topical issues affecting the economic environment.

McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law.  She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.

Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences.  She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth.  Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.

McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)

Catherine is the mother of four and is involved in many school and community events.