Morten Spenner, CEO at International Asset Management (IAM), comments on the results of the Towers Watson Global Alternatives Survey 2010 pertaining to funds of hedge fund assets managed on behalf of pension funds.
A recent Towers Watsons Global Alternatives Survey of the top 100 alternative investment managers of pension fund assets, revealed that alternative assets managed on behalf of pension funds rose marginally from USD 817,002m in 2008 to USD 817,090m in 2009. It showed that fund of hedge fund assets managed on behalf of pension funds dropped from its peak of USD 146,242m in 2007 to USD122,921m in 2008 and only rallied slightly in 2009 to USD127,299m.
We certainly see great strides being made within the hedge fund and the fund of hedge fund industry to ensure that we can satisfy all the requirements for pension funds and other institutional investors.
Hedge funds are increasingly looking to support the notion of being of "institutional quality" by developing dedicated processes specifically designed to service institutional clients needs. These often include disciplined, repeatable and transparent investment processes tracked via sophisticated proprietary software, separate risk management functions including separate operational due diligence, transparency and proprietary risk budgeting and GIPS compliant and verified performance data.
Historically, funds of hedge funds’ client base has been predominantly high net worth investors, but this is no longer the case. The tables have turned and now institutional clients occupy the majority portion of fund of hedge funds client base. IAM has managed institutional funds since 1992 and currently in excess of 65% of our assets under management are sourced from pension funds, sovereign wealth funds, life insurance companies and other types of long-term investors.
