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When it comes to spreading risk through a portfolio by investing in hedge funds, private equity or real estate, a new study said you should save yourself disappointment and money if you aren't ready to get serious.

Greenwich Associates, an investment consulting group, surveyed 2,475 institutional investors worldwide and found that their gains from alternative investments -- instruments other than stocks and bonds -- didn't make much of a difference because many of them hadn't put in enough money to make an impact.

Investment banks, pensions, endowments and foundations in the U.S. put about 7.5% of their portfolios into hedge funds, private equity or real estate, and that won't cut it, the survey said.

"If your goal isn't to get private equity and hedge fund allocations in your portfolio to at least 10% -- and 15% is even better -- then know your plan to get there, or don't go there at all," said Chris McNickle, a consultant who worked on the survey.

John Webster, a managing director at Greenwich, said that while the data from institutions isn't an exact parallel for individual investors, the basic premise is the same.

"There is that delicate balance to be struck between how much you allocate to these types of investments so that you make a reasonable impact on the portfolio on the whole, but not so much that if these happen to go wrong, you wind up with losses that you cannot cope with."

Unlike investing in mutual funds, private investment partnerships such as hedge funds and private equity funds require investors to assume a greater degree of downside risk, sometimes because short stock bets rise in value, other times because the investments are illiquid and can't be sold off if their value starts to fall.

Most hedge funds require a minimum investment of $1 million, and investors must meet

Securities and Exchange Commission

qualifications that call for an annual income of $200,000 a year.

But taking part of your fixed-income allocation and maybe a bit of your equity allocation and putting that into some sort of alternative investment spreads the risk -- just as big investors do. The biggest hurdle is finding an alternative investment fund that will take your money.

There are about 200 publicly traded real estate investment trusts trading on the

New York Stock Exchange

, the


and the American Stock Exchange. They can be viewed

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at this Web site.

Private equity is much less accessible -- most funds have long lockup periods and very high investment minimums, often as much as $5 million, according to Alex Stockham, editor of, a Web site that covers the buyout and venture capital industry.

Hedge funds are less remote, but still aren't easy places for ordinary investors to park their money. The easiest route to a hedge fund strategy is through a registered fund of hedge funds. Most of these funds, including the

Advisory Hedged Opportunity Fund

run by

American Express


, and similar funds run by

Banc of America





, require a $50,000 minimum investment, and many still require investors to meet the high income requirements.

Other strategies are looking to reach a wider market, such as the Superfund offered by Quadriga Investment Group. After some tussling with the SEC, the managed futures fund is being offered to investors for as little as $5,000, though investors still must meet "suitability requirements" that vary from state to state.

Webster said a decision to invest in alternatives isn't one to make lightly, but is not necessarily a bad idea.

"If it's good enough for the institutions, it's good enough for the individual," said Webster. "But one's ability as an individual to have the expertise to really run these things ... and get comfortable with them is very, very limited."