CHICAGO (HedgeWorld.com)–The end of the war with Iraq apparently will not be enough to lift optimism for the stock market among affluent investors but could bode well for hedge funds, according to a recent survey.
Cash sitting on the sidelines and in other asset categories is not likely to flow back into stocks anytime soon, even with the war in Iraq reaching a conclusion, said George H. Walper Jr., president and director of Spectrem Group. Spectrem conducted a survey of investors with more than US$500,000 to invest, on April 15 through April 21.
The money will go into other classes, such as hedge funds, real estate and cash. Hedge funds in absolute terms are still a small percentage of portfolios, according to the survey, but still jumped sharply in absolute terms. Hedge funds were about 2.3% of assets, up from 0.8%, according to Spectrem. People don’t yet naturally turn to hedge funds as an alternative without some type of guidance, and the industry isn’t in a position to do that to a significant degree, Mr. Walper said.
But relative conservatism is keeping assets out of stocks, too, contrary to some expectations. “I would’ve expected more optimistic feelings from investors,” Mr. Walper said. “That surprised me. It surprised all of us,” he said.