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Is Hedge Fund Mania Officially Over?

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The obsession with hedge funds (evidenced by hedge fund shoes, hedge fund shows, reports that investment banks have, obviously out of envy, morphed INTO hedge funds, and, lest we forget, hedge fund Do-It-Yourself guides) may be over, according to a new survey.*

The Spectrem Group report shows that nearly one-third of households with a net worth of $25 million or more ditched their hedge fund investments in 2006. While 38% of such households invested in hedge funds in 2005, only 27% did so last year. Households with net worths of $5 million or more investing in hedge funds dropped from 17% to 14%.

But what about the only quasi-rich?

The slightly-less affluent $10-million-to-$25-million person also cut his exposure, although only fractionally. In 2006, 18% of such households had hedge fund investments, compared to 19% in 2005.

And the poor? What about them, hmm? Are they still enamored with hedge funds? Apparently, yes.

The practically poverty-stricken $5-million-to-$10 million group actually saw their numbers in the hedge fund investor ranks grow, to 8% from 6%.

It’s like we always say—once the homeless (and a guy who thinks it’s cool to marry one's own daughter) buy into a trend, you know it’s time to cash out.
*one survey = enough for us here at the DB HQs
Ultra Rich Ditch Hedge Funds In ‘06 [FINalternatives]


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