MSNBC – Institutions such as pension funds will pour more than $500bn into hedge funds in the next four years, accounting for more than half of the expected inflows.
According to a study by Casey, Quirk & Associates and the Bank of New York due to be released on Tuesday, global institutional investment in hedge funds will exceed $1,000bn by 2010 – up from $360bn today. US institutional investment has doubled in two years, to about $140bn.
Institutions’ share of hedge-fund assets will rise to 40 per cent, from 30 per cent today, continuing a decade-long trend which is reshaping the industry as it moves away from its original foundation of high net worth investors. The study said that two-thirds of the institutional money would be from retirement plans.
The move is fuelled by the search for returns by pension funds. A conventional portfolio consisting of 60 per cent equities and 40 per cent bonds might return less than 7 per cent a year, which was inadequate to meet the requirements of a retirement plan, the study pointed out.
