Financial News Online US- BlackRock said it will buy small stakes in startup hedge funds as traditional fund companies try to replicate the flourishing returns from alternative asset managers.
BlackRock executive Howard Berkowitz, who heads the asset manager’s hedge fund group, told a Monaco conference that his company would seek to invest in young alternative assets managers in order to “be on the ground floor and be able to get a great rate of return.”
Hedge funds have been hotly pursued by financial services firms: 25 alternative asset managers raised $10bn (€7.4bn) in the past 12 months by selling ownership stakes.
Traditional asset managers, particularly, have struggled to imitate the dramatic returns earned by hedge funds through a variety of methods. Some have established their own internal alternative asset investment groups, as BlackRock has done.
Old-line fund managers have also put over $30bn (€22.5bn) in a relatively new investment method that allows them to short stocks as hedge funds do. The method is called 130/30 investing partly because it allows fund managers to short sell 30% of their portfolios, and it has attracted asset managers including State Street Global Advisors and Barclays Global Investors, according to data from Pension & Investments. State Street alone has $6bn invested in 130/30 strategies and their variations.
