Celent report reflects hedge fund industry assets still poised for explosive growth from pensions and institutions.....

Hedge Funds New York: In a recent Celent report concluding a study of trends in hedge fund administration further evidence of the potentially immense increase in institutional assets was clear. A review of the finer points of the study, as well as conversations Opalesque had with Andrew Dougherty, COO of Alternative Investment Fund Services at BNP Paribas Financial Services and Robert Schaeffer, Managing Director of Equity Fund Services found that administrators are seeing a subtle shift in hedge fund manager demands, all focused on securing what is likely to be a large influx of future investments from these demanding investors.

Observing same client trends: reaching alpha goals
The Celent study noted the growing importance of portable alpha, which has seen many fund managers looking at options such as OTC derivatives, and the development of hybrid vehicles. Hybrids are defined by the report as “the practice of carving out a discrete amount of capital to be invested in illiquid private instruments only.” By offering exposure to both public and private investments fund managers are able to shift gears more easily depending on market cycles, a capability magnified by the market shifts of the past year. Likewise, hybrids are attractive to investors as they allow diversification in both spaces without separating assets or requiring multiple managers and additional fees.

“Making money picking stocks is not an easy thing to do. Managers are looking for returns anywhere they can find them. There are managers out there well positioned on the private market who, depending on their risk matrix can offset certain risks in the public markets through private holdings, and vice versa” notes Schaeffer.

Observing same client trends: reaching asset goals
In their report, Celent estimates endowments and foundations to account for 40% of institutional fund capital and pension plans to account for 50%. Even more interesting, they expect pension inflows to account for 65% of hedge fund assets in a mere one and a half years. To look at the numbers by asset breakdown, the recently released Conference Board Study r......................

Source:
http://www.opalesque.com/AMB2008/46929Celent_report_reflects_hedge_fund_industry.html