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UK - The head of the Institute of Chartered Accountants in England and Wales has advised pension fund trustees to "proceed with caution" when it comes to investing in hedge funds.

"Institutional investors such as pension funds and life assurance companies account for over a quarter of assets invested in single hedge funds," ICAEW chief executive Eric Anstee said.

"Yet trustees of pension funds and their advisers need to proceed with caution if they are to embrace this form of fund management, given the many different forms and owners of funds, as well as the lack of oversight."

Writing in the Financial Times, Anstee said: "My concern is that a significant failure in the hedge fund market would not only affect investors.

"It would severely damage the market itself and could seriously undermine the fragile confidence that is being rebuilt in the savings and fund management industry, crucial to encouraging greater long-term saving by individuals."

Earlier, Barclays Global Investors' CEO Blake Grossman had said there is increasing convergence between conventional fund management and hedge funds.

Anstee will be succeeded as CEO at the Institute by Michael Izza on December 6.

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