Hedge fund assets will increase at a compound annual growth rate of 15% between 2005 and 2008, resulting in overall growth of 75% in that time, according to TowerGroup.

Hedge funds have become the hot pick as more investors look for ways to outdo average market returns. In the years to come, TowerGroup maintains, hedge funds are going to become more mainstream, especially as institutions increase allocations to alternative investments. But although the assets of hedge funds will grow, the actual number of hedge funds will stay relatively the same.

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