In the first-round survey, a majority of investors cited diversification as their main objective in allocating to hedge funds. Among the second-round interviewees who were planning to increase their target allocations by 10% or more, half named diversification as the motivating factor. Among the approximately one in ten who were planning to decrease allocations by at least 10%, concern with a lack of transparency was the most frequently cited reason.

(4) Institutions are thinking and acting as long-term investors. While almost a quarter of second-round interviewees said they have liquidated some investments or plan to do so, overall the investors surveyed showed no inclination toward a long-term exodus from hedge funds. This is understandable, considering that 93% of all interviewees said they make hedge fund investments with a time horizon of at least three years, and more than half have a time horizon of five years or more.

(5) Investors...
[ View Full Essay]