10/01/2011 Author: Elana Margulies

BREAKING NEWS: Institutional investors to boost hedge fund targets, SEI study reveals

Institutional investors are anticipated to strengthen their commitment to hedge funds this year, according to new research seen exclusively by HFMWeek. 

The ‘Institutional Hedge Fund Investing Comes of Age’ report’s positive findings, from SEI, in partnership with Greenwich Associates, reveal that more than 54% of investors surveyed plan to boost target allocations in the next twelve months, over three-and-a-half times the percentage giving that response in 2009. 

“In our view, investors are committed to hedge fund investing, because hedge funds generally provided diversification benefits during the market decline in 2008 and first quarter of 2009,” said Phil Masterson, managing director, investment manager services at SEI. 

“In addition, it appears investors have more realistic performance expectations post-crisis, consistent with most investors reporting their primary objective for their hedge fund investments as seeking non-correlated returns as opposed to absolute returns.” 

Other key findings from the study show that investors have paid more attention to risk management and client services functions at hedge funds. 

The survey stated that institutions have given risk management more weight in fund selection, arguing it is not only essential to mitigate financial losses and attract new capital, but also to protect a firm's reputation. 

Investors are also asking for better client services, demanding that hedge funds redouble their efforts to add more value to this facet of their operation through ongoing improvements in investor reporting.