Reuters – Hedge funds, which tend to trade stocks more actively than institutional investors, have become the most important clients for many major brokerage firms, a new survey found, confirming awidely held view on Wall Street.
The survey, conducted by financial consulting firm Greenwich Associates, analyzed equity brokerage commissions paid by more than 250 institutions. They included 44 hedge funds and an assortment of long-only investment managers, mutual funds, pension funds and banks.
Based on this sample, the report found that the average hedge fund paid $35 million in equity brokerage commissions in the 12 months to February 2006, with larger hedge funds managing more than $3 billion in assets averaged $54 million.
That compares to $20 million paid by the typical long-only investment manager, an average of $52 million by mutual funds, $11 million by pension funds and $16 million to $17 million by banks.
“Based on our research results and conversations with major brokers, we estimate that hedge funds could now account for as much as 30 percent of brokers’ U.S. equity commission flow,” said Greenwich consultant Jay Bennett in a news release.
