Although only 2% of the $14 trillion in institutional assets is currently invested in hedge funds or hedge funds-of-funds, in coming years, that is expected to considerably rise, and with it, dramatic changes in hedge funds, Dow Jones reports. Most notably, hedge funds will offer far greater disclosure, fairer fees and lower-cost, passive choices.
Institutions around the world currently have about $350 billion invested in hedge funds, estimated Kevin Quirk, a partner with Casey, Quirk & Associates. He envisions that nearly tripling by the end of 2010 to more than $1 trillion.
Because stocks and bonds are likely to return only 5.5% to 6% a year over the next five years, institutional investors hungry for better returns in the 8% to 10% range will turn to hedge funds, Quirk said.
Some believe that because it takes pension funds as long as three years from first considering a hedge fund investment to actually making it, the fact that there is so much buzz among institutional investors about hedge funds is the foundation for their investing in the instruments for years to come.
In addition, many believe that even retirement plans will begin offering hedge funds-of-funds.
The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.