Hedge Fund Use among Pension Funds Growing

March 4, 2009 (PLANSPONSOR.com) - An absolute majority of all assets under management (AUM) by hedge funds and funds of hedge funds globally are from institutional investors, according to the Alternative Investment Management Association (AIMA).

An AIMA press release said one-third of those assets from institutional investors now come from pension funds – accounting for about one-sixth of overall hedge fund assets. Tom Kehoe, Research Manager of AIMA, explained in the announcement that: “Traditionally, high net worth individuals accounted for most of the assets under management by the hedge fund industry globally but institutional investors have been steadily increasing in significance in recent years and we think they now account for an absolute majority of AUM.”

Kehoe said the figures are estimates, but are supported by all data at AIMA’s disposal.

Andrew Baker, Chief Executive of AIMA said the shift demonstrates the growing importance the hedge fund industry is playing for pension funds. “Hedge funds and funds of funds are skilled at managing risk and delivering stable returns, which institutions need at this time more than ever. They offer an extension of investment capabilities to institutional investors through their skills and expertise,” he said

The new research from AIMA defines institutional investors as pension funds, university endowments, foundations and governmental authorities.