Wednesday, July 30, 2008

Hits to hedge fund reputation do not deter HNW investors: survey

A new survey by Bank of America finds that high-net worth individuals with alternative investments expressed greater satisfaction over the last 12 months with every category of alternatives, including hedge funds, venture capital, real estate and private equity, than with their more traditional investments. 57% of those surveyed expressed satisfaction with their alternative investments, compared with only 5% who are dissatisfied.

Interestingly, 44% of survey participants invested in hedge funds said that negative publicity about hedge funds has not affected their investment decisions. 20% said that hits to hedge funds' reputation did make them rethink their strategies.

While BofA surveyed individuals with more than $3 million in investable assets, the industry has to beware of creeping into the upper echelons of the retail arena. Blowups and scandals involving hedge funds, even sizeable funds, are inevitable and the media will dramatize the situation by seeking out the victims. Accounts of little old ladies, even really rich ones, who get burned will draw unwanted scrutinty to the industry.

The Wall Street Journal offers one example today - an investor in the failed Vesta Strategies.

Read the Bank of America news release on the survey here.

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