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From Kirsten Bischoff, Opalesque New York:

For the hedge fund industry a silver lining is emerging from the financial crisis. Institutional investors are now considering expanding their hedge fund investing due to the discovery of intra portfolio correlations combined with a pressing need to make up other losses (long-only, private equity, real estate, etc).

“We observe a clear move on the part of pension funds and other institutional organizations toward the hedge fund universe,” said John Burbank, Managing Member and Chief Investment Officer at $3bln long/short manager Passport Capital at the recent Opalesque Roundtable in San Francisco.

Ultimately history may prove the financial crisis may was a necessary step in convincing institutional investors to change their approach to investing. “…pension funds are beginning to view the investment world not as a mix of asset classes, but rather as a set of exposures to various systematic factors.” said Jeremy Evnine, President of multi-strategy, quant firm, Evnine & Associates.

The financial crisis has also sparked institutional investors looking for a targeted risk/return to court hedge fund managers who might tailor their strategies to meet the stringent requirements of this investor set. Passport Capital is one such firm, with Burbank noting the firm recently modi......................

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