Hedge fund investors set to increase allocations - 04/11/02
The majority of hedge fund investors expect to increase their allocations to the industry over the next year, according to the Hennessee Hedge Fund Advisory Group's fifth annual hedge fund investor survey.
The survey found 54 per cent of respondents plan to increase their hedge fund allocation, while 40 per cent intend to increase their fund of funds allocation.
Fund of funds seem to be the fastest growing group of hedge fund investors. They made up 3 per cent of hedge fund investments in Hennessee's 2001 survey but 15 per cent this year.
Individuals and family offices continue to be the largest group of hedge fund investors. They contribute 56 per cent of the capital to the industry, according to the survey. A few years, ago wealthy individuals were responsible for close to 80 per cent of investment in the industry, but large institutions, such as Calpers, Prudential and Sumitomo Life have recently ploughed into hedge funds. They often use fund of funds to get into the industry.
Taken after a difficult year for hedge funds, the survey nonetheless indicates hedge fund investors are happy with their investments' performance.
Only 29 per cent said they would have liked to get better performance. Hedge funds returned just under 4 per cent last year, according to Hennessee, compared with an S&P 500 loss of 11.89 per cent.
Investors also professed themselves happy with the funds' risk management. Only 17 per cent of investors are seeking better risk management, compared with 45 per cent last year. Risk management has come into sharper focus for hedge funds in recent weeks since the breakdown of pricing in Lipper & Co's convertible fund.