The ultra high net worth families who are members of the Institute for Private Investors have nearly a third of their portfolios invested internationally, according to the organization’s annual Family Performance Tracking Survey.

The survey found an increasing international slant to the way members invest, with one in five having over 50 per cent of their portfolios invested outside of the US. The most popular way of gaining this exposure is through international equities, with 67 per cent of the sample invested, followed by hedge funds (57 per cent) and private equity (49 per cent).

Furthermore, the UHNW are increasingly concerned about inflation, and nearly a quarter of IPI members are managing currencies or hedging currency risk, as they worry about the devaluation of the dollar. Of those managing currency risk, 53 per cent are using a currency overlay strategy or manager; 24 per cent are using derivatives, and 18 per cent are using ETFs.

On asset allocation, alternative investments made up 42 per cent of portfolios, which IPI said was similar to last year, and hedge fund investment remained broadly flat at 19 per cent. Fixed income fell slightly from 27 per cent last year to 25 per cent, with the decrease attributed to investors withdrawing from municipals, IPI said.

“What we’ve seen over the years is that sophisticated private investors are essentially early adopters who typically lead the market. Their investment strategies are harbingers of what becomes reflected in the overall market, in terms of both institutional and individual investors,” said Charlotte Beyer, chief executive of IPI.

On average member investors made a return of 11.26 per cent in 2010, below the S&P’s 15 per cent. However, the organization pointed out that its members’ 10-year average return, at 6 per cent, is well above the S&P’s 3.6 per cent.