U.K. pension funds advised by Watson Wyatt Investment Consulting increased hedge fund allocations by more than 60% in 2007, according to a survey of the 350 funds advised by the firm, with 62 client searches for hedge funds, compared to 28 in 2006. The number of hedge fund-of-fund searches rose to 27 in 2007 from 10 in 2006. Hedge funds remain a good way to capture both manager skill and ensure diversification, Paul Trickett, European head of investment consulting at Watson Wyatt, said in a news release. While funds of hedge funds continue to be popular, single strategies are fast gaining traction among higher governance funds and those wishing to outsource this type of selection exercise.
Equity mandates continued to be the most in demand for the pension funds in 2007, making up 30% of all manager selections.