UK - Alternative investments are growing in popularity among pension funds and other institutional investors, new research shows.
A report by Watson Wyatt – Alternatives 99 – shows that fund of hedge funds globally saw a 30% increase in assets under management over the 12 months to December 2003.
European head of investment consulting Nick Watts said the need for greater diversity following a two-year bear market had prompted a change in allocations.
“The message of increasing diversity in pension funds assets to both reduce risk and increase returns is definitely getting through.
“Increasing focus on risk in the pension fund and the source of that risk combined with the need to reduce deficits through increased returns have accelerated the trend towards investment in alternatives.”
The survey – which questioned 155 fund managers – focused on the world’s 99 largest alternatives managers, and covered fund of hedge funds, private equity fund of funds, property and commodities.
It also showed that pension fund assets accounted for 49% of property fund assets in Europe, 35% in Asia, and 52% in North America.
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