HF Allocations May Rise By 50%

Over the next several years institutional investment managers are expected to increase their hedge fund allocations 25-50%, according to Christopher C. Geczy, a professor at the Wharton School of Business. Investors are often searching for diversification in these investments, he says.

Geczy said that the recent high-profile hedge fund meltdowns won’t significantly impact the long-term outlook for funds. He noted that in a market with 15,000 funds, some failures are normal. Institutional investment managers today place about 10% of their portfolios in hedge funds, up from 5% just two years ago. Over the next two years, that allocation will likely rise to between 12.5% and 15% of their portfolios, Geczy projects.

Infrastructure will be one hot AI area over the next couple of years, Geczy says. It proved one of the notable topics addressed at the recent IMCA program at Wharton. Much of that investment will go outside the U.S. because, "investors have a fairly hard time accessing U.S. infrastructure investments," Geczy notes.