Where are rich investors investing their money?

Some interesting findings for the year - Where are the richest of the rich affluent investors putting their money and where they plan to put it in the coming year?

A research study conducted by The Phoenix Companies has come out with interesting results. As per the study, the affluent or rich investors invest significantly in both mutual funds and alternative investments, and half of them plan to change their investment allocations in the next year.

The detailed results of the entire study in detail is available at the following PDF file: (https://www.phoenixwm.phl.com/servlet/DocDelivery?DocId=docu_publ_advi_insight_0108.pdf&DocType=0)

Below, I aim to present the summary of the research study:

The research focused on 2 areas:
• Investments in mutual funds and
• Investments in alternative investments.
Alternative investments are defined as investments other than stocks, bonds or mutual funds, including real estate other than buying a second home.

In fact, 81% of respondents responded by mentioning that they have at least one mutual fund in their investment portfolio outside of a retirement plan like IRA, 401(k), 403(b), or other retirement plan and 74% of the respondents hold some or the other alternate investment.

Among the alternative investments, real estate (constituting around 45%) is the most widely held alternative investment, followed by exchange-traded funds (ETFs) (constituting around 30%), hedge funds/hedge fund of funds (constituting around 25%), and private equity funds (just over 20%).

This may come as good news to the Mutual Fund holders. Typically, I am NOT a person who would recommend investing in Mutual Funds because of the costs and fund management charges. But the 81% among the richest of riches having an investment in Mutual funds shows that they trust their mutual fund managers. Now I don’t know if the affluent investors get some rebate in terms of fund management charges or not.

Related: Should you trust your Mutual Fund Manager?

However, I am a biggest supporter of ETF’s or Exchange Traded Funds, and I am happy to see that 30% of the rich respondents trust that investment.

Related: Simplest Investment Strategy & An example of ETF or Exchange Traded Fund

That was about the past. What about the future? For 2008, the study reveals that affluent investors have no common plan when it comes to investment in these turbulent times.

49% of mutual funds owners and 52% of alternative investment owners said they will continue to invest the same amount or more in the coming year, while 51% of mutual fund owners and 48% of alternative investment owners expect to be bearish and invest less in the coming year. This shows a clear flipping and uncertain position.

So effectively, the investor mood is really really low when it comes to investor confidence in the economy. Call it the US recession fear, or the shaking up of global financial markets, the uncertainty that looms over the global markets is also reflected in the rich investors mood.

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