Fuse Blog

Number of Accredited Investors Proliferates

  • Why are asset managers so keen to sell alternatives to individuals? One reason is the sizable addressable market: 24.3 million households counted as accredited investors in 2022. Put another way, 18.5% of U.S. households had the necessary qualification to invest in hedge funds and other alternatives, according to an SEC study released in December.
  • That’s a big jump from the 2.8 million households that qualified as accredited investors in 1989, the last time the definition of “accredited investor” was significantly expanded. The 6.8% CAGR for accredited investors is double the CAGR of households owning mutual funds over the same 1989-2022 period.
  • The SEC believes the accredited investor totals have proliferated because the primary qualifications—households with more than $1 million in net worth (excluding primary residence) and individuals and couples with over $200,000 and $300,000 in income, respectively—have never been adjusted for inflation. Had those thresholds been indexed to inflation, there’d be only 7.4 million accredited investor households as of 2022.
  • Should net worth and income thresholds remain unchanged, the SEC estimates that the number of households qualifying as accredited investors will rise to 45.8 million (or 31.4% of U.S. households) in 2032.

Accredited Investors vs. Fund Investors (Millions)

Blog 1.9.24

Sources: FUSE, SEC, ICI