Institutional money grows in hedge funds

Direct investments by endowments, foundations and corporate pension funds represent a quarter of the assets of the world's largest hedge funds. The amount has increased to 25% this year, from 20% in 2005, according to a study conducted by Greenwich Associates (Conn.) and Global Custodian magazine. The study also found that funds-of-funds have topped high net-worth individuals and family offices as a source of assets for these large hedge funds, with high net-worth individuals and family offices contributing 21% of total assets. Institutional investments in hedge funds and funds-of-funds have climbed in recent years. Thirty-six percent of U.S. institutions said they invested in hedge funds, compared to 29% in 2004. Asked the same question about funds-of-funds, 25% of institutions said they invested in hedge funds in 2006, up from 19% in 2004. Furthermore, some 22% of the institutions participating in Greenwich Associates' 2006 research said they plan to increase their hedge fund allocation by 2009, compared to only 2% that said they plan to decrease that allocation.