130/30 Hedge Fund Growth

Date: Wednesday, January 16, 2008
Author: Richard Wilson, Hedge Fund Blog

Financial News reports that the amount institutional assets allocated to 130/30 hedge fund strategies could grow 7 fold over the next 3 years to over $350 Billion. Another survey by Merill Lynch also took a stab at 130/30 growth figures and guessed that over $1 Trillion of both international and domestic institutional and retail assets will flow into these types of funds over the next 5 years. Finally, a third report from the well respected TABB Group predicts that 130/30 strategies will have up to $2 Trillion in international assets within two years. A high percentegage of these assets are expected to come from US pension plans, half of which are expected to invest in these more heavily in the years to come.

Dozens of small shops have created 130/30 strategies alongside large players such as UBS, Bear Stearns and ING. Is it too late to start a 130/30 hedge fund and take advantage of this growth? Experience would tell me no. There are lessons to be learned about how current 130/30 portfolio management teams are being constructed and how they have positioned themselves in the market.