Real estate takes from alternative investments

High net worth individuals shifted more money into real estate investments, at the cost of alternative investments in 2006, says Merrill Lunch and Capgemini in their 11th annual World Wealth Report. Published on June 27 2007, the report noted a rise in global direct real estate transaction volumes from High Net Worth Individuals (HNWI) to $682 billion in 2006, up 38% from 2005. Although they remained a key component of HNWI portfolios, overall allocations to these investments dipped in 2006.

For the purposes of the report, alternative investments were defined to include hedge funds, structured products, foreign currencies, commodities, private equity/venture capital and derivatives.

“In highly volatile markets, more investments are hedged, as there is more potential for profitability,” says the report. “The year 2006 proved to be an unfavourable year for structured products and hedge funds as market volatility subsided. The Volatility Index (VIX), which tracks market volatility over