Institutional Assets a Quarter of Largest Hedge Fund Investments

June 19, 2007 ( - A new study from Greenwich Associates has found direct investments by endowments, foundations, corporate pension funds and public pensions together represent 25% of the assets of the world's largest hedge funds.

According to a Greenwich Associates press release, the current share of institutional assets in the largest hedge funds is up from 22% in 2006 and 20% in 2005. In addition, Greenwich Associates consultant John Feng said in the press release, “Institutions are also big investors in hedge funds of funds, which represent another 25% of hedge fund assets.”

According to the study, conducted in conjunction with Global Custodian magazine, in 2006, U.S. institutions allocated 2.1% of total assets to hedge funds and funds of funds, up from 1.9% in 2005 and 1.6% in 2004. U.S. institutional allocations to hedge funds are now more than double that of 2001.

Thirty-six percent of U.S. institutions in 2006 said they invest in hedge funds, up from 32% in 2005 and 29% in 2004. Asked if they invest in hedge funds of funds, 25% answered yes in 2006, up from 23% in 2005 and 19% in 2004, the news release said.

Twenty-two percent of the institutions participating in Greenwich Associates’ 2006 research said they plan to increase their hedge fund allocation by 2009, versus only 2% that said they plan to decrease that allocation.