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From Kirsten Bischoff, Opalesque New York:

Although asset growth has been slow, there is a growing consensus that hedge funds will reap significant benefits from growth in US institutional investor allocations over the next few years, with the biggest leap in growth expected from US pensions that are currency woefully underfunded.

“[Pensions] don’t need to go from 5% to 20% [hedge fund exposure] in order for substantial assets to flow into the hedge fund industry,” said Charles Cassidy, co-head of hedge fund research at consultant firm Cambridge Associates said during the latest Opalesque Roundtable in Boston. However, as much as Cassidy would like to see asset growth in the hedge fund industry, he expressed concern that there is potential for it to happen at a rate and speed greater than what would be beneficial to the industry.

“The pension funds will be a major source of assets for hedge funds,” said Kevin Divney, Chief Investment Officer of long/short US equity firm BeaconCrest Capital Management.

A recent survey of US pension funds by Pensions & Investments revealed that only 60 US pension plans (out of 1,000) currently have more than $250m in hedge funds. With most pensions funds currently placing only a small percentage (typically single digits) of their assets into hedge funds ......................

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