Hedge Fund Assets Projected to Grow by 20% in 2004
Hedge fund industry observers have projected that total assets under
management by Hedge Funds would grow by 20% during 2004, to nearly $700
billion. Such projection was based on the expectation that institutional
investors in both the United States and Japan would be more active during
2004. The growing hedge fund regulatory oversight should not hamper the
growth of hedge fund assets observers noted.
Development of new Hedge Fund Strategies
In 2003, institutional investors were more active in implementing their
hedge fund strategies, and for the first time, devoted more assets to
hedge funds than other retail investors. Based on this development in
hedge fund strategies, and expecting a more robust continuation of such
trend, Gloria Parker, the chief investment officer and founder of Parker
Global Funds projects that 2004 would see more growth from institutional
investors.
Growth of Pension Fund Investments in Hedge fund
strategies
Last month, the Japanese Government pension fund, the largest pension
fund in the world, [US$300Billion] stated its intension to begin investing
some of its assets into hedge funds. Other large North American pension
funds such as California public employees retirement scheme [CALPers]
have started to invest in hedge fund strategies as well. With the gradual
recovery of global equity markets from the past three years of economic
decline, 2004 may see an accelerated growth in the global assets of hedge
fund investments. Long/Short equity strategies, Merger Arbitrage, Distressed
and Currency strategies are expected to do well in 2004.
According to Ms. Parker, Merger Arbitrage and Distressed strategies generally
lead the pack of other strategies during recovery and bull markets, because
as distressed situations get worked out, such resolution allows funds
to take off. Merger and Acquisition strategy has returned about 11.6%
yearly for the past decade; however 2002 was a loosing year for M&A
and in 2004 investors in the hedge fund strategy realized a 9% positive
return. With the growing transparency of Hedge Funds, thanks to organizations
such as Hedgeco.net, the major impediments limiting pension fund schemes
from pursuing more active investments in hedge fund, strategies is in
the process of being lifted.
Source: Paul Oranika
Editor-in Chief
Hedgeco.net
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