EUROPE - Dutch, UK and Nordic institutions are demonstrating the highest take up of hedge fund investment as interest in the alternative asset class continues to rise, according to a new survey on European institutions' alternative investment.
The research – conducted by Prospera on behalf of the Alternative Investment Management Association (AIMA) and Informed Portfolio Management (IPM) – surveyed 151 of Europe’s largest institutional investors representing major pension funds, life insurance companies and trusts with combined assets of more than e1500bn.
The research found 40% of institutions currently invest in hedge funds but by 2006, investment in alternative investment categories will jump to 60%.
Alternative investments, especially in tactical allocation and currency management, were found to be more popular with the larger institutions with this trend likely to continue.
Switzerland, the Netherlands and the Nordic region were the markets with the greatest experience in hiring external specialist managers for alternative investments, the survey revealed.
Over the next two years, the majority of investor activity in external management is expected to come from the Netherlands and the UK, with about half of the institutions in both countries considering hiring new external active currency managers.
Fund of hedge funds was found to be the most widespread type of hedge fund investment with one third investing in these. Switzerland was the biggest fan of fund of hedge funds with 58% of institutions choosing this route compared to 40% in the Nordic region, 33% in Germany, 24% in the Netherlands and just 11% in the UK.
When it came to manager searches, UK institutions were the most likely to seek external advice with 89% stating they always or occasionally use a consultant while Nordic funds were the least likely with 62% of respondents stating they do not use consultants at all.
IPM is a quantitative investment manager providing alpha strategies to pension plans, life insurers and mutual funds in Europe. AIMA is a global trade association focussing on hedge funds, managed futures and managed currency funds.
The research, conducted between June and September 2004, is the second annual survey conducted by Prospera but the first to include the Nordic investor community.
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