WEST PALM BEACH, FL (HedgeCo.Net) – Attendees at a just completed European Pension Funds and Insurers conference were told that the growth of European institutional investment in hedge funds may beslower than previously anticipated. This tendency may produce less impact on the investment returns posted by European pension funds or portfolio diversification.
Markus Ohlig, vice president of one of the leading financial consultants Greenwich Associates, made these remarks. According to Mr. Ohlig, European Alternative Investments including hedge funds, real estate, commodities and equities currently represents a total of about 8% of the investment portfolios of European Pension Schemes and Insurers. Out of that total, hedge fund investments accounts for only 1% of the invested assets. Ohlig�s remarks were presented at the ICBI’s PensMart European pensions conference.
Mr. Ohig said, “If present trends continue then you might go from 1 percent to 2 percent or 3 percent in five years, but no more than that – though that’s still a lot of new money.” He added, “It’s a slow learning curve and there’s no real commitment from institutions in Europe; only a few institutions view hedge funds as an integral part of their asset allocation … the proportion using them for absolute returns is very small and is mainly in balanced funds.”
According to Ohlig a 3% investment by European Pension funds in hedge fund strategies may not be sufficient to turn the tide against the current deficits carried by European Pension funds. Such level of asset allocation in hedge funds is remarkably lower than commitments by US Pension and Endowment funds that have average commitment of about 15% of their assets in hedge fund management portfolios. According to Greenwich Associates, only about 11% of European Institutional investors have invested in hedge funds out of 14% that intended to do so.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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