Most Popular Hedge Funds for Institutions

Pension & Investments recently compiled a list of 35 hedge fund and 10 fund of fund managers that had the largest capital inflows in 2011. To join the club, the funds had to have at least an additional $100 million. Bear in mind that these investments were made by institutional investors (pension funds, endowments, foundations and sovereign wealth funds) and are only part of the entire investment picture. Many new investments and the assets invested are not reported. As an example, BlueMountain Capital Management garnered $323 million according to the study but, according to its founder and president, had $1 billion from institutional investors.

The most popular hedge fund strategies were credit/fixed income, multi-strategy, long/short, activist and global macro based on the number of funds. Based on new assets under management, multi-strategy led the way; followed by credit/fixed income, activist and long/short. Capula Investment, a multi-strategy fund, added $825 million to rank number one. Next inline were D.E. Shaw Group ($555 million), Trian Fund Management ($500), ValueAct Capital Partners ($500 million and Ascend Capital ($465 million). Other famous names lower on the list are Brevan Howard Asset Management, Carlson Capital Management, Avenue Capital Group, Och-Ziff Capital Management Group, GSO Capital Partners (a part of the Blackstone Group), Astenbeck Capital Management and Saba Capital Partners.

The fund of fund list was led by Prisma Capital Partners ($666 million), Permal Group - a subsidiary of Legg Mason ($507 million), Blackstone Alternative Asset Management ($506 million) and Pacific Alternative Asset Management ($400 million). Three funds - Prisma, Blackstone and Pacific Alternative Asset Management - are recipients of an increased allocation by Kentucky Retirement Systems ($400 million each) that vaulted them to the top of the rankings. There were three trends affecting the allocation to fund of funds. Public and corporate pension plans are increasing their investments to diversify their fixed income portfolios. Fund of funds are expecting non-US pension plans to invest in alternative assets.

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