Citi: Global institutional hedge fund assets to double in five years

Global institutional investments in hedge funds will jump 107% to $3.566 trillion by the end of 2018 from year-end 2013, a report from Citi Investor Services predicts.

The report, which is the result of 138 interviews with hedge fund managers, investment consultants, asset owners and other investors, estimates total worldwide institutional hedge fund assets of $1.721 trillion at the end of 2013, a total of 4.5% of the worldwide institutional assets of $38.651 trillion.

The predicted number of $3.566 trillion at year-end 2018 will account for 8% of the predicted worldwide institutional assets.

The greatest increase is predicted to be for hedge fund investments by pension funds globally, to $2.473 trillion at the end of 2018, a 126% jump from the estimated $1.094 trillion at the end of 2013.

Sovereign wealth funds are expected to see an 87% increase in hedge fund assets to $863 billion, and foundations and endowments are expected to see a 37% increase to $230 billion.

The report also predicts that hedge funds as a percentage of the total alternatives allocations will increase to 28.1% at the end of 2018, up from the estimated 19.9% at the end of 2013.

The report also says that institutions are continuing to move toward direct investments in hedge funds, away from hedge funds of funds, with 75% of all assets in the market coming from direct investments at the end of 2013, up from 66% in 2010.