The popularity of these vehicles is evident based upon their growth. Last year alone, the hedge fund industry experienced a 34% growth rate, bringing industry assets up to $795 billion. Since the beginning of 2000, hedge funds have grown 145%, according to the 7 th Annual Hennessee Hedge Fund Investor Survey.
Most popular among hedge fund holdings were distressed funds, held in 63% of hedge fund portfolios. Other popular methodologies were event driven (56%) and convertible arbitrage (55%). To determine which hedge fund investments are most suitable, 49% of hedge fund investors use a formal allocation process – compared to 62% of hedge fund investors using such a process for their traditional investments. Additionally, 42% use a consultant for their hedge fund investments.
Hedge fund investors are also poised to increase their allocations. More than six out of 10 (62%) endowments that invest in hedge funds expect to increase their hedge fund allocation.
More information about the survey can be obtained by contacting Alexander Smith-Ryland of the Hennessee Group at (212) 857-4444.