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Institutions: Institutional investment managers predicted to increase hedge fund allocations by 25 to 50% over next 2 years - Wharton, Public pensions finding investment opportunities in credit crisis

Monday, June 16, 2008

Opalesque Exclusive: Institutional investment managers predicted to increase hedge fund allocations by 25 to 50% over next 2 years - Wharton Portfolio managers see infrastructure as a high-growth category, notes panel at Wharton Executive Education's Investment Management Consultants Association Alternative Investments Certificate Program

Expect institutional investment managers to increase their hedge fund allocations 25 to 50 percent over the next couple of years, says Christopher C. Geczy, Ph.D., academic director of Investment Management Consultants Association (IMCA) Alternative Investments Certificate Program at the Wharton School of the University of Pennsylvania. Investors are often searching for diversification in these investments, he says.

Recent high-profile hedge fund meltdowns, "do not immutably change the longer-term outlook," according to Geczy. "You'd expect a certain proportion of failures-including some spectacular failures-in a universe that now includes roughly 15,000 funds. But hedge funds are not necessarily riskier as a group just because some fail," says Geczy, who also is an assistant professor of finance at Wharton.

Institutional investment managers today place about 10 percent of their portfolios in hedge funds, up from five percent just two years ago. Over the next two years, that allocation will likely rise to between 12.5 and 15 percent of their portfolios, Geczy projects.

Infrastructure......................

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