Close Close
Sign In
Newsletters
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards
Podcast Center Video Center Webcasts Resource Center Events
About ThinkAdvisor Contact Us Advertise With Us Asset & Logo Licensing Sitemap Terms of Service Privacy Policy Copyright © 2024 ALM Global, LLC. All Rights Reserved.
ThinkAdvisor

Portfolio > Alternative Investments > Hedge Funds

Growing Diversity Among Institutional Investors in Hedge Funds

By Staff Writer

X
Your article was successfully shared with the contacts you provided.

NEW YORK (HedgeWorld.com)–A survey of hedge fund managers by LJH Global Investments and Reuters suggests that new types of institutions increasingly are investing in hedge funds.

Historically, high-net-worth investors and fund of funds accounted for the lion’s share of hedge fund money, said LJH President James Hedges, speaking at a teleconference. He found that while this familiar base is still strong, allocations from other sorts of institutions are starting to pick up.

Managed account platforms, in particular, are investing in hedge funds. These are institutions that fall into the “other” category, said Mr. Hedges. A comparison of quarterly flows over the past few years shows that the share of this group is increasing steadily.

“We are convinced that there are new types of market interest,” he said. Some of the institutions are entering the market via novel structured products.

With respect to strategies, an ongoing trend over the past several months is a very strong capital inflow to the multi-arbitrage sector. Multi-arbitrage funds manage in a single portfolio a range of instruments, including convertible bonds, fixed income, high yield and distressed securities.

They have been the winners in asset growth, followed closely by long/short equity managers, according to the survey, which is conducted quarterly. Mr. Hedges said one should not infer that returns in these strategies would necessarily be affected negatively. Equity hedge covers many different styles, and some of those managers may be able to scale up while others can not.

But he is concerned about the ability of commodity trading advisers to absorb inflows. He said many investors now want exposure to commodity futures, and a lot of money is going to this sector. Funds that are systematic traders with computer-driven models have limited scalability, he said.

Although the absolute amount of capital going to them is less than the flow to some other sectors, the effect could be disproportional because of this bounded capacity. Global macro managers, by contrast, do not experience deteriorating performance with increased assets, said Mr. Hedges.

[email protected]

NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.