Survey: Institutions Dominant Among Hedge Fund Investors

Nov 10 2009 | 10:00am ET

Hedge funds used to be the preserve of the very wealthy individual. Now, the industry’s bread is buttered by institutional investors.

According to a new survey, nearly three-quarters of hedge fund assets belong to institutional investors, such as pension funds and university endowments. The numbers from Preqin Hedge are somewhat higher than most estimates of institutional participation in the hedge fund industry—which put the figure at closer to, although above, 50%—because the firm included funds of hedge funds in the institutional investor group.

The survey also founded that the bigger the hedge fund, the bigger the institutional client list. Institutional investors, on average, account for 88% of the assets at hedge funds with more than $1 billion. Those with between $500 million and $1 billion owe 73% of their assets to institutional clients, while the figure for funds with between $200 million and $500 million is 75%.

The difference between larger and smaller funds could not be more dramatic. Hedge funds with between $10 and $20 million can thank institutions for just 46% of those assets, funds with between $5 million and $10 million just 38%. Institutional investors account for just 20% of the assets at hedge funds with less than $1 million.

Preqin polled more than 300 hedge fund managers for the survey.


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