U.S. Assets in 130/30 to Reach $350 billion by 2011: Merrill

Date: Wednesday, January 9, 2008
Author: Leigh Doyle

U.S. assets in 130/30 strategies could reach US$350 billion by 2011, according to a new Merrill Lynch report.

The report, titled Institutional Demand for 130/30, surveyed 160 U.S. institutional investors about their expectations to increase or initiate 130/30 strategies. The firms questioned had a combined $1.5 trillion in assets with $10 billion in 130/30. With this information, it was assumed that current assets in 130/30 for U.S. institutional investors total $50 billion.

Based on the responses received, the Merrill Lynch projection expects the interested investors will shift between 5% and 20%—or $75-$300 billion—of their public equity allocation to 130/30 in the next 36 months.

Adding that to current totals, the firm expects anywhere from $125-$350 billion assets in 130/30 in three years in the United States.

The report goes on to predict that U.S. retail interest in 130/30 could increase by $100-$200 billion, making the demand for such strategies over $500 billion in the U.S. alone by 2011.

Combined with the demand overseas—which, according to the report, is roughly equal to the U.S.—the worldwide increase in 130/30 could be as high as $1 trillion.

For an additional stories about alternative investments like 130/30, visit A Trustee’s Guide to Alternative Investments.

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