HedgeFundsX

Though Mitt Romney made his reputation as a private equity investor, his tax returns show the presidential candidate has a large portion of his wealth in an even more aggressive corner of the investment world: hedge funds.

A Globe examination of Romney’s taxes and a prior financial disclosure shows that about one-third of the assets in his Individual Retirement Account are in hedge funds, predominantly those run by his former firm, Bain Capital in Boston. Romney’s IRA could be as large as $101 million, according to his financial disclosure form, although he is not required to provide the exact amount. Of the 25 investments in that retirement account, 11 are Bain hedge funds.

Separately, a trust established in the name of Romney’s wife, Ann, has about $6 million of its $40 million in assets, or 15 percent, in hedge funds.

Since releasing this and other personal and family trust tax returns this week, Romney has come under scrutiny for earning about $21 million in each of the past two years, and yet paying effective tax rates of 13.9 percent and 15.4 percent. Most of Romney’s income is from investments, like Bain’s leveraged buyout funds, hedge funds and stocks. They are taxed at a 15 percent long-term capital gains rate, much lower than the top tax rate of 35 percent that would apply to a millionaire’s salary or ordinary income.

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Beth Healy, The Boston Globe, January 27, 2012