You may want to read an interesting post today in a WSJ blog, The Wealth Report, by Robert Frank. In the post, Frank reports that a survey of 400 wealthier Americans finds them satisfied with their investments in hedge funds, which account for about 9% of their average portfolio. The average return to July 24th, according to Hedge Fund Research, on the hedge fund asset class is a loss of 3.2%.
The good news is that you don’t need to have a multi-million dollar portfolio to add this asset class to your portfolio. Even a portfolio of $100,000 can add a 10% position in hedge funds (we call this asset class “market neutral” to avoid the stigma and misrepresentation of the term “hedge fund”) by adding mutual funds that engage in merger and convertible arbitrage, long/short strategies, and even a fund of funds.
Our most popular portfolios have maintained a 10% market neutral allocation for over 10 years. Interestingly, our mutual funds in this asset class are performing similarly with the average loss of 3.2% found by Hedge Fund Research.