Median strategic hedge fund allocations by U.S. and Canadian institutional investors increased to 7.7% as of June 30 from 7.1% in 2003, while private equity dropped to 7% from 7.5% and real estate allocations declined to 6.7% from 7.1%, according to the 2005-2006 Russell Survey on Alternative Investing released today.
Hedge fund allocations in Europe rose to 5.3% from 3.6%; while allocations in Australia increased to 6.2% from 4.3% and Japanese allocations rose to 8.1% from 7.1%. The survey report noted small response rates for hedge fund questions from Australian investors and private equity questions from investors in Japan in 2003.
By 2007, North American institutions expect to have a greater percentage of allocations to hedge funds, 9.1%, than either private equity at 7.6% or real estate at 7.3%. In Europe and Australia, however, the largest alternative investment allocations will be in real estate. European institutions will increase real estate allocation to 10.5% from 9.8%; Australians will decrease their real estate allocations to 9.9% from 10.4%. Their hedge fund allocations are projected to be 6.6% of assets.
The survey of 176 North American investors, 65 Europeans, 22 in Australia and 64 in Japan was conducted in the first half of the year.
