Study: Most Institutions Considering Hedge Funds

Jul 5 2011 | 2:37pm ET

A new survey from Infovest21 says 60% of institutional investors surveyed see hedge funds as a possible solution to pension underfunding problems.

The Q2 2011 survey involved 32 institutions/consultants allocating to hedge funds or funds of funds.

Said Lois Peltz, president of Infovest21: "Institutional investors are primarily looking to hedge funds for non-correlated returns. Potential for higher returns, diversification, and downside protection were cited to a lesser extent."

The survey found the average institution allocated 29.2% to hedge funds and 11.4% to funds of funds. Over the next 12 months, the institutions expect their allocations to increase to 35.5% for hedge funds and 16.2% for funds of funds.

Roughly 50% of respondents have been allocating to hedge funds or funds of funds for more than 10 years.

Over 40% of the respondents said they are using equities to fund hedge funds. Fixed income and cash were each cited by almost 30%.

In terms of strategies, institutional investors were most fond of equity long/short and multi-strategy, although almost 40% of respondents said their view of the latter depended on the asset allocator.

Info21 says country-specific funds, activists, asset-based lending and mortgage-backed securities are out of favor while managed futures and distressed are getting a look-in for the first time by many institutional investors.


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Chicago-based independent futures brokerage and clearing firm R.J. O’Brien & Associates (RJO) has hired industry veteran Daniel Staniford as Executive Director, responsible for the firm’s institutional business development in New York and London.

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