Alternative Investing Still Hot in US, Europe

June 20, 2002 ( - More and more investors, eager to cut back on risk through diversification, are fleeing the still volatile equity market for the world of alternate investments, a new report said.

The World Wealth Report 2002, published by Merrill Lynch and Cap Gemini Ernst & Young, found that alternative investments were particularly popular with North American and European high net worth investors (HNWI) in 2001.

Hedge Fund Assets up
According to the report’s findings:

Get more!  Sign up for PLANSPONSOR newsletters.

  • hedge fund assets under management grew by 34% in 2001, with high net worth individuals holding the greatest share;
  • the number of hedge funds exploded to about 6,000 in 2001 from 880 in 1991, and
  • about $144 billion of new assets were invested in 2001, bringing the global total invested in hedge funds to approximately $563 billion

Most alternative investment vehicles are US-based. Nonetheless, the market for European hedge fund assets has quadrupled to $64 billion since 1999, creating a fledgling alternative to US hedge funds, according to the report.

High Net Worth Wealth On the Rise

More broadly, the World Wealth Report noted the number of high net worth individuals worldwide grew almost 3%, just under 200,000 individuals, to 7.1 million people last year.

Their combined wealth rose approximately 3% to $26.2 trillion in 2001 despite drops in most of the world’s equity markets.

Alternative investments include hedge funds, private equity/venture capital and managed futures funds.

For more about alternative investing, see our Investments Solutions Topic .