This is odd is we think that consumers could, for instance, buy a house and borrow heavily from a bank against the current value of the house, even if it is overvalued (as many are nowadays). Banks do not seem to worry much about whether market valuations are correct in relation to historical levels or some valuation model at the time of lending money against overvalued collateral. Consumers could invest as much money as they wanted in firms like Tyco, Worldcom, Enron… In the late 90s you could also invest in some more decently managed firms, but still very risky, as many dot com. Even many retail investors can borrow stocks and short them and sell or by at credit. You only need to post the margins. Anyone can invest in derivatives and leverage themselves as much as their credit allows them. Many retail investors trade in commodity derivatives. So it seems that consumers are allowed to take a considerable amount of risk and no one regulates or tests their level of wealth when making their investments decisions- except when they decide to invest in a hedge fund-. This odd exception is even odder when it is justified: “hedge funds are targeted to sophisticated investors, which are those with a minimum wealth of X thousand Euros….” . So you need to be a sophisticated investor, and in order to prove that, you need to be wealthy. Evidence shows however (see recent survey in the US by the Spectrem Group on those with wealth over 5 million dollars, excluding the house they live in) that wealthy people have nine–tenths of their wealth in low risk assets. Super-rich are pretty risk averse individuals. If you owned it, why gamble it? So if the wealthy do not buy hedge funds, who invest in this class of assets?. This leaves us with institutions as one of the main clients of hedge funds, some of them being endowments or pension funds. But who is the last owner of a pension fund? Probably someone with wealth below X thousands dollars, that is, an unsophisticated investor!