Reuters – Pension funds invest only a small fraction of their assets in hedge funds even as these lightly regulated portfolios pull in billions of dollars in new assets every month, a study releasedon Wednesday showed.<\/p>\n
Hedge funds made headlines with out-sized returns in the 1990s and industry assets doubled to roughly $1.2 trillion in the last five years. In the first quarter of 2006, investors put $27.6 billion in hedge funds, Tremont Capital Management reported. But private investors and endowments, not pension funds, fueled most of that demand, consultants at Greenwich Associates wrote in a report.<\/p>\n
U.S. corporate pension funds allocated just 0.9 percent of their assets to hedge funds while public pensions funds put in even less, sending only 0.7 percent into the asset class.<\/p>\n
“Average hedge fund allocations for U.S. institutions are skewed upward by the sizable holdings of U.S. endowments, the pioneers of institutional hedge fund investing,” Greenwich Associates consultant William Wechsler wrote.<\/p>\n