Almost 60 percent of all hedge fund assets under management come from institutional investors, according to a new survey. And as institutions account for a larger share of hedge fund assets, fund companies are increasing the infrastructure allocated to transparency and compliance.
A survey by the industry group Alternative Investment Management Association and auditing firm KPMG found that institutional investors now account for 57 percent of all hedge fund assets under management. Pension funds have particularly contributed to the growth in institutional assets, with 76 percent of hedge funds surveyed saying pensions have increased their hedge fund allocations since 2008.
Mikael Johnson, lead partner for alternative investments at KPMG in the U.S., said the report shows that investors are asking hedge funds to maintain the same institutional-grade controls as they have in their own organizations.
According to one hedge fund manager quoted in the report, “Robust infrastructure is the only way to attract institutional investors.”
A full 90 percent of hedge fund respondents reported increased demand for due diligence since 2008, and 84 percent indicated they had increased transparency for investors in that same time period.
Also, hedge fund management firms have almost universally increased investment in regulatory compliance since 2008, with 98 percent of firms hiring additional staff in this area.
The report, which was released today, was based on in-depth interviews with 150 hedge fund management firms with more than $550 billion in combined assets under management.
