FOFs - Expected to increase by 2013 - BONY Study

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Report: Hedge Fund Assets to Fall to $1T Before Rebound
A new report says that hedge fund assets under management, which peaked at about $1.9 trillion in 2007, will retreat to a bottom of $1 trillion in 2009 before coming back strong. However, by 2013, the asset class will have almost $2.6 trillion, according to the report by Bank of New York Mellon and investment management advisory firm Casey Quirk entitled "The Hedge Fund of Tomorrow: Building an Enduring Firm." In March, hedge fund assets were down to $1.724 trillion, according to HedgeFund.net. Although investor redemptions were a serious problem for many hedge funds during the economic fiasco that was 2008, institutional investors accounted for less than 17% of net redemptions, the report said. When institutional investors were broken down further, pension funds accounted for only 3% of those redemptions. The study's authors expect that North American pensions will be the largest institutional investors in hedge funds between 2010 and 2013, followed by British and Northern European institutions. For those who predict that the funds-of-funds model might not survive scandals such as the Bernard Madoff $65 billion Ponzi scheme, the study has a surprising response: funds-of-funds are expected to oversee almost 50% of total hedge fund assets by 2013, as compared to 36% in 2005 and 17% in 2000. The study also made predictions about the four most "likely-to-succeed" hedge fund business models. Those are, the classic hedge single-strategy hedge fund, multi-capability platforms, merchant bank alternative mangers and combined alternative and traditional long-only managers.
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