New York (HedgeCo.Net) – Approximately one in every four dollars managed by hedge funds worldwide is invested by public and private sector pension funds, while roughly three out of every four dollars invested in hedge funds come from institutional investors worldwide.

The Alternative Investment Management Association (AIMA), the global hedge fund association, and the CAIA Association have jointly published the first of a series of educational papers about hedge funds for pension fund trustees and other fiduciaries at institutional investors.

In the UK, over half of all defined benefit (final salary) pension schemes allocate to hedge funds or other alphaseeking strategies.

Investors’ earnings from hedge funds top $1.5 trillion in the last decade.

According to new research commissioned for the paper from Hedge Fund Research Inc, investors have earned about $1.5 trillion from hedge funds, after all fees have been deducted, over the last 10 years. That is despite the performance losses of $306 billion in 2008, by far the industry’s worst year.

Pension funds would often rather have steadier returns with lower volatility than a higher return with greater volatility. This is why risk-adjusted returns are often as highly valued as the headline figures. Moreover, the hedge fund industry’s risk-adjusted returns are competitive with traditional asset classes such as stocks and bonds partly because those returns tend to be less volatile — meaning they are generally steadier and more consistent over time.

Editing by Alex Akesson
For HedgeCo.net
alex@hedgeco.net
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