Who Invests?

Hedge Fund Investors

With a proven history of delivering positive returns under varying market conditions, hedge funds have increasingly become a favored investment choice for public and private pension funds, endowments, non-profit organizations, and other institutions seeking diversified portfolios and reliable returns to meet their financial obligations.

While the S&P 500 has made steady gains over the past three years, from 2010-2012, hedge funds have consistently outperformed the S&P 500 when their returns are measured using the Sharpe Ratio.1

Institutional Investors

Institutional investors, like foundations, educational institutions and pensions, have come to rely on hedge funds as a nimble investment tool aimed at mitigating risk to protect and grow their assets.

  • 66% of the money invested in hedge funds comes from institutions.2
  • Recent data suggests that 92% of U.S. hedge fund investors expect to maintain or increase their allocations to hedge funds in 2014.3

Improving the Quality of Life through Foundations

Foundations, with investments in hedge funds, support communities in the U.S. and around the world through improvements in education, health and economic issues as well as an emphasis on arts and cultural development.

  • For example, the the Robert Wood Johnson Foundation held nearly $1.58 billion in hedge fund investments at the end of 2012, approximately 17% of total assets.4

Creating Educational Opportunities through Endowments

For many educational institutions, hedge funds are an important tool used to diversify their portfolios, manage risk and produce reliable returns. Hedge fund investments help these institutions fund scholarships, financial aid, research, athletics and other programs.

Building Retirement Security through Pension Plans

Many public and private pension plans, which rely on hedge funds to provide diversify their portfolios, manage risk and produce reliable returns, provide retirement security to millions of families in America and around the world.As of February 2014, the 200 largest U.S. retirement funds utilize hedge funds at a growing rate, with their investments totaling $150 billion5, including:

  • Texas Teachers pension fund had hedge fund investments totaling $10.6 billion.6
  • United Parcel Service had $3.71 billion in hedge fund investments.7
  • Missouri State Employees pension had $1.34 billion in hedge fund investments.8

 


1Preqin Ltd., June 2013

2Preqin Ltd., January 2014

3Preqin Ltd., January 2014

4Robert Wood Johnson Foundation

5Pensions & Investments, February 2014

6Pensions & Investments, February 2014

7Pensions & Investments, February 2014

8Pensions & Investments, February 2014