Recent TABB survey forcasts, surveying 81 U.S. hedge funds managing some $89 billion in early 2006, confirming research which suggests that money continues to flow into emerging market hedge funds, largely from institutional investors looking for above market returns.
Hedge fund industry assets are variously estimated to be anywhere from $1.2 trillion to $1.5 trillion. U.S. hedge funds are expected to dramatically raise their investment in overseas markets in coming years as domestic markets get more crowded and returns diminish, according to analysis released on late last week.
The biggest percentage investment increases are expected to be in Asia Pacific markets, which could see U.S. hedge fund assets nearly double to $107 billion from 2006 to 2008, according to TABB Group, an independent research firm.
But in dollars, European markets are expected to be the biggest beneficiaries of U.S. hedge fund investment, seen growing to $437 billion in 2008 from some $330 billion in 2006, TABB said.
There are currently approximately 8,500 hedge funds, they are usually private and don’t publicly disclose assets.
TABB also forecasted Latin American investment by U.S. hedge funds will grow to $29 billion in 2008 from $19 billion in 2006, while investment in other emerging markets will grow to $21 billion from $14 billion during that period.
Adam Sussman, TABB senior research analyst, said U.S. hedge funds are less likely to be concerned about recent volatility in emerging markets than retail investors.
Overseas investing “is a continuing trend. I don’t think they are going to be scared off by a few volatile months,” said Sussman in an interview with Reuters. “Long term, more and more hedge funds are going to be invested in emerging markets.”
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