West Palm Beach (HedgeCo.Net) -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 projectionwas 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 thegrowth of hedge fund assets observers noted.
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, 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.
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 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 schemes from pursuing a more active hedge fund investment strategy, is in the process of being lifted.
Source: Paul Oranika
Editor-in Chief
Hedgeco.net
