Bloomberg – Christopher Bittman, head of the $1 billion University of Colorado Foundation, is committing more money to hedge funds even after the industry handed investors record losses last year.
Bittman plans to add as much as $30 million to the private partnerships in 2009, lifting the foundation’s hedge-fund holdings to about 20 percent of assets because he expects them to hold up better than other investments in the global bear market.
While Morgan Stanley estimates that clients may withdraw 20 percent of the $1.2 trillion they have in hedge funds this year, not everyone is running for the exits. Investors like Bittman are adding to their positions, focusing on funds that hold easy-to- trade assets like stocks and currencies. Others are adjusting their portfolios or changing managers to better survive.
“Institutional investors are by no means through with hedge funds,” said David Holmes, a partner at Eager, Davis & Holmes, which tracks the hiring of money managers. “But it will be a bit slow for several quarters as investors rethink their investment goals and strategies.”
Investors are adding new managers this year at about the same pace as they did in the fourth quarter, when nine institutions placed $582 million with hedge funds, according to the Louisville, Kentucky-based research firm. In the fourth quarter of 2007, 28 institutions invested $1 billion.
