Hedge Fund Allocations Plummet Among UHNWIs, Declared 'Dead' as Investment Option

Hedge fund investments by ultra-high-net-worth individuals (UHNWIs) have plummeted in recent years, dropping from approximately 12% of their portfolios to just 2% over the past 16 years. According to Michael Sonnenfeld, Founder and Chairman of Tiger 21, a global network of UHNWIs and entrepreneurs, this decline signals that hedge funds have essentially become "dead" as an attractive investment option for the super-rich.

Sonnenfeld stated, “Hedge funds are dead as a doornail,” highlighting that the allocation to this asset class has remained stagnant at a mere 2% as UHNWIs have increasingly pulled back their investments in hedge funds over the last several decades. He pointed out that investors could achieve similar exposure to hedge funds with lower fees through alternatives like index funds or private equity.

Private equity currently dominates the investment portfolios of Tiger 21 members, accounting for the largest share at 29%. Real estate investments come in second at 27%, followed by public equities at 19%.

Tiger 21, which has over 1,300 members worldwide, predominantly consists of first-generation wealth creators who collectively manage more than $150 billion in assets. The network serves as a platform for these investors to exchange advice on a wide range of topics, including wealth preservation, investment strategies, and philanthropy. As the wealth management landscape continues to evolve, it seems that the ultra-wealthy are gravitating towards other asset classes, leaving hedge funds on the decline.