US high net worth investor members of Tiger 21, a peer-to-peer network organisation have stampeded out of hedge funds, slashing asset allocation to just 3 per cent of all assets from 12 per cent, while holding significant assets in cash and increasing bond exposures.

Tiger 21, made up of more than 160 members with a total of $10 billion in investable assets, made the disclosure in its 2008 Asset Allocation Survey.

“Members are liquidating hedge funds while also suffering significant losses, resulting in allocations to hedge funds falling by almost 75 per cent, compared to the 2007 Asset Allocation Survey results,” the organisation said.

The network said members have held steady on listed equities at 30.5 per cent of all assets compared to last year’s 31 per cent allocation.

"If the data that we collect in the next few months continues to show a dramatic decrease in hedge fund investing, this would represent the single biggest shift in our members' asset allocations since we began tracking this data three years ago," said Michael Sonnenfeldt, founder and chief executive of Tiger 21.

"These are unprecedented times. Some of our members are experiencing their first losses since they started investing after selling their company. However, there are a handful of members who are experiencing significant gains by betting against the market, or by investing in select investments that have bucked the market trends,” he said.

Real estate continues to be the second largest asset category for Tiger 21 members at 23 per cent to 27 per cent. Despite the declines in most classes of real estate all across the country, many of its members still think income producing real estate is a key to their long term wealth preservation strategy.

Fixed income and cash comprise 30 per cent of total assets this year. Fixed income alone represents 18 per cent of the average portfolio, an increase of 2.3 per cent from last and cash remains high at 11.8 per cent versus 13 per cent in the previous year.

While private equity has been reported at 9.6 per cent, we tend to discount this because of the time lag in private equity reporting in the absence of a public market valuation, the organisation said. Tiger 21 said it expects reductions of 30 to 50 per cent in members' allocation to private equity over the coming year.