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Portfolio > Alternative Investments > Hedge Funds

European Wealthy Holding Tight with Hedge Funds

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LONDON (–Hedge funds and private equity offer the best investment opportunity, according to nearly 150 ultra-high-net-worth investors surveyed by JPMorgan Private Bank.

Hedge funds remain popular as a source of new and existing money among the respondents. Seventy percent invested in them during the last two years, and almost 25% of them said the hedge funds make up 25% or more of their entire portfolio, according to a JPMorgan statement on the survey. Moreover, 99% of respondents said they expect to increase or maintain their hedge fund exposure over the next 18 months.

The ultra-high-net-worth respondents are not expecting shoot-out-the-lights returns from their hedge funds. Forty-two percent said they expect returns of 5% to 10% over three to five years. The most favored strategy was long/short equity, with 45% of respondents saying it will be best over the next two years.

The JPMorgan survey also indicates that European hedge fund managers are gaining favor, with 42% of the respondents expecting them to generate the best returns. Still, 45% said U.S. hedge fund managers would generate the best returns.

The survey was taken as part of a two-day Paris conference in October called “Focus on Absolute Returns.” Many of the respondents had at least US$10 million in investable assets, according to JPMorgan.

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