(by Peter Van Bruggen)

Fund market 2000-2002 decline and current year stagnation led to pension funds seek for extra earnings. Hedge funds are their top target.

During the next four years, pension funds may invest up to $200 billion to hedge funds, research data shows. About 400 U.S. institutional investors already invested over $66 billion into hedge funds in 2003. In 2008 the total from them may reach $300 billion, almost a half of hedge funds overall cash-inflow. That will lead to professional and institutional investors to hold up to 2/3 of hedge funds’ capital.

In recent years, hedge funds got more clients. Charity funds are the example: 40% of all charity funds with $100 million capitalization invest into hedge funds.

Pension funds’ losses are connected with retirees lifetime increased and stocks and bonds return went down. Now they need quick income, analysts say. Institutional investors expect hedge fund annual income of 8%, while specialists doubt as in the current year they got only 3% so far, against 12% of the past ten years.