| Fund of hedge funds most popular worldwide, but pension funds prefer property |
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| 17/09/2006 | |
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Funds of hedge funds are the most popular alternatives among global investors, according to the Global Alternatives 99 ranking, a survey conducted by the specialised magazine Global Alternatives and Watson Wyatt. According to the research, global alternative assets were up a fifth to $1.26 trillion over 2005. "The Alternatives 99 ranking shows that interest in alternative asset classes continues to grow, with hedge fund of funds the most popular asset class in 2005," confirmed Maha Khan-Phillips, the editor of Global Alternatives. "Institutional investors are becoming more sophisticated about the ways in which they invest however, and, in a highly competitive environment, a lot of managers will have to work harder on their value propositions." Fund of hedge funds managers attracted 44% of the new inflows. Even if those inflows were down from 50% the previous years, a sign that investors are feeling less comfortable than they used to with hedge funds, it remained the most popular category. Real estate, the second most popular category, attracted 30% of the new inflows, followed by private equity funds of funds (21%) and commodities (5%). "As a result, total alternative assets in the survey are now split 43% in real estate, 37% in FoHFs, 17% in PEFoFs and 2% in commodities," stated Watson Wyatt. Pension funds remain the most significant alternative investors, with global investments in alternatives totalling $77bn in 2005, up from $62bn in 2004. Pension schemes are still more conservative in their choices, with property remaining the most popular asset class among them. 35% of their new alternative inflows went to property against 34% to funds of hedge funds, 25% to private equity funds of hedge funds, and 6% to commodities. Watson Wyatt reported that alternative assets managed for pension funds globally are now allocated 45% in real estate, down 3% from 2004, 33% in private equity (38% in 2004), 21% in FoHFs (13% in 2004) and 1% in commodities. J.L. |
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