A vacation home might be a nice getaway, but not necessarily a smart addition to the portfolio.

As purchases of second homes grow, a contrary trend has emerged among the wealthiest of Americans: the shedding of vacation homes and investment real estate properties in favor of lower risk asset classes such as fixed income.

That’s significant, as affluent investors often act ahead of the mass consumer market and are in better positions when downturns happens – most recently, when the Internet bubble burst in 2000.

The World Wealth Report, released earlier this month by Merrill Lynch and Capgemini, found that the real estate allocations of high-net-worth individuals dropped to 13% in 2004, from 17% in 2003, suggesting that the super-rich have anticipated the sector overheating.

“All of our relationship managers told us globally that their clients were now taking profits from real estate,” says Petrina Dolby, vice president of Capgemini’s global wealth-management practices. The report analyzed size and growth of individual wealth in 68 countries.

High net-worth investors, defined as individuals with at least $1 million in financial assets, agreed that the property market was strong but that they didn’t want to be overly invested in an asset class that includes vacation homes, investment properties, and real estate investment trusts.

“One of their keys to success was being well-diversified,” Ms. Dolby says. “Having too much of their portfolio in the real estate basket would make them feel uncomfortable.”

The survey results come as more people are shopping for second homes, for vacation or investment purposes. Purchases of second homes surged in 2004 to 2.82 million, up 16.3% from 2003, according to the National Association of Realtors.

“It’s almost like a feeding frenzy out there in the housing market,” says Bob Jackson, a certified financial planner in Scottsdale, Ariz. “People who wouldn’t normally be asking about a second home are asking about it.”