UHNW group says member allocations to hedge funds down by 75% in one year. Members of Tiger 21, a networking and education association of wealthy investors, have seen their allocations to hedge funds drop by 75% this year as a result of outright losses and redemptions made in the name of minimizing additional losses in the face of a long and disruptive financial crisis.

New York-based Tiger 21's 160 or so members -- many of them company owners and corporate executives -- collectively manage more than $10 billion.

These investors have trimmed their overall allocations to hedge funds from an average of 12% in 2007 to an average of 3% this year, according to Tiger 21's third annual asset-allocation survey.

Huge shift

"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," says Tiger 21's CEO and co-founder Michael Sonnenfeldt.

The group's latest allocation survey also shows Tiger 21 members hold significant percentage of their assets -- 11.8% -- in cash; on par with their 13% liquidity reserve in 2007. Tiger 21 members "switched to a higher level of liquidity far in advance of the advice of most wealth advisors," according to the association.

Public-stock allocation in the portfolios of Tiger 21 members was static this year at 30.5% versus 31% in 2007. Similarly, real estate -- the biggest investment category after public equity for Tiger 21 members -- accounted for about 25% of their holdings, as it has since Tiger 21 started tracking its members' allocations in 2006.

Tiger 21 members say their private-equity accounted for 9.6% of their portfolios -- but because reporting for such holdings is sluggish, the association says it's expecting writedowns of between 30% and 50% on its members' private-equity holdings through the next six to 12 months.

"These are unprecedented times," says Sonnenfeldt. "Some of our members are experiencing their first losses since they started investing after selling their company." But then some -- Sonnefeldt says "a handful" of them -- "are experiencing significant gains by betting against the market, or by investing in select investments that have bucked the market trends."

Sonnenfeldt and Richard Lavin founded Tiger 21 in 1999. Sonnenfeldt was fresh from selling his interests in the real-estate firm Emmes and Company, and Lavin was chairman of the Executive Committee, an association of CEOs now known as Vistage. -FWR

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