WEST PALM BEACH, FL (HedgeCo.Net) – A new study just released by Morgan Stanley shows that assets of hedge fund of funds have grown exponentially since the year 2000. According to the survey, fund offunds assets grew at an annual rate of 50%, and during the first six months of 2004 such growth experienced acceleration of up to 65%.
Morgan Stanley study also said that the majority of the new assets, [two-thirds] invested in hedge fund management portfolios are coming through the fund of funds channels. In 2000, about 18% of new hedge fund investments were made via the fund of funds platform. During the second quarter of 2004 according to the survey, new investments into hedge funds through the fund of funds route had increased to 40%.
Huw van Steenis, hedge fund investment analyst said the first six months of 2004 turned out to be boom time for hedge funds. According to him, the private client demand for hedge funds declined during the first and second quarters, part of the reason was the lackluster returns posted by most hedge funds. Steenis noted however that the institutional demand for hedge fund products was very strong during the same period.
According to Mr. van Stenenis, hedge fund returns in excess of cash continues to decline, from 14% recorded in the mid 90�s to 4.3% in 2001. Such data, Mr. Steenis explained, shows that hedge fund bubble syndrome has not materialized.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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