Research by Preqin reveals that institutional investments now makes up 61% of all hedge fund assets, a 16% jump from 2008.
A survey of 60 hedge funds responsible for $95 billion in assets, found moving from an asset class predominated by wealthy individuals and family offices to an institutionally focused industry had “fundamentally” changed the industry. Forty-six percent of respondents said it had resulted in their firms putting more risk management procedures in place.
Forty-two percent of those polled said the increasingly institutional base of clients had also led to a reduction in the fees they charge on their funds.
An overwhelming majority of hedge fund managers predict institutional investor capital will become increasingly important to the industry over the next 12 to 18 months. Almost 85% of all fund managers surveyed said they expect the proportion of their assets coming from institutional investors to rise over this period.
Nearly half of respondents said they plan to market to the institutional sector in 2011. Thirty-eight percent of those surveyed intend to launch new funds in the next year, which according to Preqin suggests the industry was continuing to recover and that fund managers were looking to capitalize on revived investor confidence.