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Portfolio > Mutual Funds

Survey: Wealthy Households Avoid Mutual Funds

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NU Online News Service, Dec. 2, 2003, 4:22 p.m. EST – U.S. households with a net worth over $5 million have shifted 26% of their investable assets into managed accounts, up from 13% in 2001, according to results of a survey by Spectrem Group, Chicago.[@@]

Managed accounts are bundles of stocks and other securities owned and controlled by a single investor. They are comparable in some ways to a personalized mutual fund.

Wealthy investors also are putting more assets in hedge funds, real estate, private equity investments and other alternative investments, Spectrem says.

But Spectrem found that wealthy households now have only 6% of their investable assets in ordinary retail mutual funds, down from 11% two years ago.

Many financial advisors have been encouraging wealthy and even moderately affluent investors to move out of mutual funds. Advisors say owning managed accounts gives the investors who can afford them more control over investment strategy and protection against receiving taxable distributions. Wealthy households’ massive shift away from mutual funds “raises some troubling questions about the continued status of mutual fund holdings in the portfolios of U.S. investors,” says Catherine McBreen, Spectrem’s managing director.


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