Japanese Interest In Hedge Funds Surged Last Year

by Phillip Morton, Investors Offshore.com

26 November 2003

Alternative investments are becoming an increasingly popular investment vehicle for Japanese institutional investors and recent research has shown a 50% increase in hedge fund allocation in 2002, exceeding the 40% increase globally.

According to a global hedge fund survey undertaken by Goldman Sachs and Russell Investment Group, of the 49 survey respondents in Japan, only six reported commitments to private equity for a total of US$360 million, whereas 20 had commitments to hedge funds totalling US$2 billion and eight more reported plans to start investing in hedge funds in the next three years.

"It is clear from the 2003 survey results that alternative investments are an increasingly important part of institutional investment portfolios in markets around the world," said Nigel O'Sullivan, Managing Director at Goldman Sachs International's Pension & Insurance Strategy Group. "With each survey we discover institutions taking even greater advantage of the benefits provided by these investments."

The survey revealed that the most popular strategies amongst Japanese institutional investors were equity market-neutral, preferred by 65% of respondents, and equity long/short favoured by 35%. The majority (85%) also preferred to utilise single strategy funds, though there was a marked increase from 22% to 55% who are now using both single strategy and funds of funds.

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