Alternative Market Briefing

25% growth driven by pensions, endowments and foundations bolstering their in house hedge fund capabilities - PerTrac

Tuesday, February 22, 2011

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Jean Claude Issa El-Khoury From Kirsten Bischoff, Opalesque New York:

A recent Preqin survey showed that 55% of hedge funds had increased their institutional client base during the past three years, with institutional investors forming on average 45% of a hedge fund’s capital. The number of pensions and endowments moving into alternatives is expected to climb even further as these underfunded vehicles need to secure higher rates of return in order to meet future obligations to their investors.

At the same time these pensions and endowments have been moving away from FoHF investing to bring hedge fund expertise in-house and FoHFs risk missing out on participating in the growth of this part of the hedge fund industry. It is perhaps the largest challenge facing fund of hedge funds post-financial crisis.

FoHFs that have survived the financial crisis are making their move to recapture the attention of these institutional investors, one of which is by bolstering the way they approach building out their manager portfolios. PerTrac, a software provider that specializes in analytics, reporting, and communications for investment professionals now estimates that one third of all fund of hedge funds utilizes their software.

According to Jeff Hendren, co-President of PerTrac, “Funds of hedge funds are recognizing that their growth will be dependent on addressing increasing investor demand for greater transparency, consistent reporting and more exhaustive analysis based on reliable data. We b......................

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