Hedge fund use in dramatic growth
Hedge fund use by European institutions has increased dramatically in 2005. Their use by continental respondents to the Russell Investment Group’s seventh annual report on alternative investment doubled to 48% from 24% in 2003.
By 2007, European institutions expect to dedicate 7.2% of portfolios to hedge funds, an increase from the 5.3% estimated for 2005. Nearly three-quarters of European hedge fund assets are invested in funds of funds, while 25.5% are invested in single funds and 0.1% is internally managed, says the report.
Private equity allocations are expected to reach new highs in all markets in 2007. European tax-exempt institutions currently allocate 4.5% of portfolios to the asset and are planning to increase this to 6.1% by 2007.
In Europe, where two-thirds of investors have real estate allocations, the proportion in the class is expected to rise to 10.5% in 2007 from 9.8% currently.