WEST PALM BEACH, FL (HEDGECO.NET) – Attendees at the annual Global Alternative Investment Management conference were told that the rate at which global hedge fund assets are growing, by 2009, hedgefund assets will constitute between 5% and 9% of the global financial management assets. Currently, hedge fund assets make up about 2% of such total.
Although estimates of hedge fund assets vary, many agree that global hedge fund assets have experienced an exponential growth in recent years. According to the Alternative Fund Services Review, an industry publication, assets under management in hedge funds had surpassed $1 trillion.
Other more conservative publications put the figure at more than $860 billion � up from $456 billion five years ago. Many more institutional investors are increasingly devoting more of their managed funds into hedge fund portfolios. According to a study conducted by Goldman Sachs in collaboration with Russell Investment Group, the percentage of European institutions investing in hedge funds will rise from 21% in 2003, to about 50% by the year 2005.
According to Allan MacLeod, head of hedge fund investments at Martin Currie, the strong inflows are expected to continue as more institutional investors are joining the bandwagon. The institutional market in the UK has been slower than its counterparts in other European countries as well as the United States. However lately, a growing number of institutions in the United Kingdom have expressed their appetite for hedge funds.
MacLeod explained �In the US, foundations and other institutional have been using hedge funds for years. We believe they should be part of an institutional portfolio but there has been little allocation from UK pension funds. But investments from funds such as BT should spur others into action.�
Many hedge fund industry participants are however worried that as hedge funds continue to attract new investor money, the ratio of returns compared with the investment will be trending lower. Some explain such lower returns as a consequence of a syndrome referred to a �capacity constraint.� Such worries have not dampened the interest of new investors in hedge fund investing.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: [email protected]
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