According to a study conducted entitled Institutional Investment in Hedge Funds: Evolving Investor Portfolio Construction Drives Product Convergence by Citi Prime Finance highlights the growth of Hege fund industry.
According to the survey, global assets invested with hedge fund firms could rise from today’s record $2.1 trillion to more than $5 trillion largely due two emerging trends.
The first is the potential for market-leading institutional investors to enlarge allocations to hedge fund strategies by $1.0 trillion to better shield against risk.
Second, the survey revealed a "convergence zone," in which hedge funds and traditional asset managers will increasingly vye confronting each other to offer a broad set of equity and credit strategies, leading to an additional $2 trillion in new allocations to hedge fund firms in the form of regulated alternatives and long-only products.
Commenting on the result of the survey, Citi Prime Finance business advisory services US head Sandy Kaul said, "We see a second wave of institutional allocations to hedge fund strategies, as well as new new allocations to long-only strategies managed by hedge fund firms."
Citi Prime Finance head Alan Pace said, "Today, with investors more focused on risk alignment within the overall portfolio, hedge fund allocations will play a central role in institutional portfolios in the years ahead."
The survey pointed out that pension funds, endowments, foundations and other institutional investors are increasingly embracing the risk management and diversification that hedge funds offer and these trends could contribute to a sharp rise in hedge fund assets over the next few years.
Citi Prime Finance, which provides trade execution, financing and business services to many of the world’s leading and emerging alternative asset management firms.
