Investhedge re hedge fund allocations july 2010

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  • 1. institutional newsHedge fund allocations on the up, says Russell allocations to hedge funds had increased toHedge fund allocations among global institu- management. Trends uncovered in the re-tional investors are still expected to rise, al- sponses include a move to allocating scarce about the 7% to 8% range in North Americabeit at a slower rate than in recent years, ac- internal resources to evaluate hedge funds, and Europe and as high as 9% to 10% in Ja-cording to a survey compiled by Russell separate account investing and institutional pan/Asia. These increases were driven byIn vestments. pressure to drive down fees. both the capital invested and increased lever- Overall, allocations to hedge funds , now Russell detected some desire to increase re- age, which contributed to higher values in a4.2% of total assets, will rise to 5. 7% in the liance on customised account structures ac- rising market.next two years as most institutions boost cessing hedge fund managers, with expected The most hedge fund disenchantment wastheir allocations to alternatives in general usage increasing from 6% in 2009 to 15% by found in Europe, according to Russell, wherewith areas such as infrastructure and private 2012. The benefits of managed accounts are allocations may not return to peak levels forequity also gaining interest. By global re- particularly in the an~a of transparency, but some time. Hedge funds are expected to re-gions, the strongest allocation to hedge funds insufficient assets in any one fund may not bound faster in North America and Japan/on a percentage basis is in Japan/Asia , where be enough for some investors to wield "sepa- Asia . Key to that future growth is the concepthedge funds are reported to account for 6% rate account clout" and some separate ac- of fee breakpoints arising in hedge funds,of total assets as of 2009. count structures may add unacceptable fidu- similar to the tradition of mutual funds. Re- Russell completed its survey during the ciary or operational risks for the plan spondents to the Russell survey anticipatefirst month of 2010 with 119 firms respond- sponsor. achieving such a breakpoint in hedge fundsing, representing $1.3 trillion of assets under Previous surveys showed that the average over the next year or two. July/August 2010