Funds of Hedge Funds: ‘A Diminishing Slice Of a Growing Pie’

Seeking Alpha – As the Wall Street Journal pointed out earlier this week, “It may be premature to write the epitaph for funds of hedge funds”.

Maybe so, but with predictions for redemptions running in the high teens for this fall, one would be excused for believing the hedge fund “bubble” has burst along with the many other bubbles inflated over the past few years.

Yet, WSJ sister publication, eFinancial news reports this week that: “Pensions Continue Push into Hedge Funds”.  This seems to back up what research firm Cerulli recently concluded – that institutions are continuing to move from long-only to alternative assets (see Monday’s post for clear evidence of this).

Dow Jones points to the UK’s University Superannuation Scheme (USS) as one example of the new and more grounded institutional view of hedge funds:

Michael Powell, head of alternative assets at the pension scheme, said: ‘The turbulence in the hedge fund industry has provided USS with a great opportunity as a new entrant. The fallout in the industry will also prove to be a great arbitrator of quality and skill among the huge number of hedge funds.’

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