Institutional investors are allocating a larger portion of their portfolio to hedge fund investments, a study has found.
The study, conducted by State Street and the 2006 Global Absolute Return Congress, found that 96% of investors made hedge fund investments last year, up from 84% in 2005.
Sixty-four percent allocated 5% or more of their portfolio to hedge funds in 2006, compared to 48% in the previous year.
“The findings of our study reinforce the industry trend we’ve been witnessing among our client base,” says Gary Enos, executive vice president and head of State Street’s alternative investment servicing business, “investment boards are overwhelmingly accepting that hedge funds are a viable option for their investment allocations.”
The study also found why investors were concerned about investing in hedge funds. Thirty-two percent said high fees offsetting returns were deemed the single greatest threat to hedge fund investing.
That concern was closely followed by headline risk(20%)and investment loss(20%).
Participants in the study included representatives from global corporate pensions, public and government pensions, and endowments and foundations with investable assets totaling more than US$1 trillion.
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