Institutional investors, including pension funds, are expected to become the largest holders of hedge funds in the future, a recent survey of 500 investors and investment management professionals by conference organizer ICBI suggests.
Ever since the bear market of 2000, institutions have been looking to expand their portfolios by shying away from traditional investments such as stocks, and are likely to displace the wealthiest individuals who are major hedge funds investors at the moment.
Seventy-three percent said they expect institutions to dominate hedge fund investments in the future, while only 11% predict that wealthy investors will continue on as the dominant shareholders of hedge funds, and 16% predicted the largest holders of hedge funds will become small retail investors.
A majority of the respondents, about 44 %, said that the solid infrastructure is the most important factor in picking hedge fund firms. Another 30% of respondents rated performance history as the most important factor, and 18% said transparency was the key.
Thirty-five percent of the respondents felt that hedge funds with many strategies have the greatest growth potential, and 28% said hedge funds-of-funds have the greatest potential for growth.
A whopping 59% of respondents polled said that Asia holds the greatest investment opportunities for hedge funds, with Europe second, at 22%, and North America third, with 19% of votes.