By: Denis Melekhov
In the past, high net worth individuals have traditionally been the primary source of hedge funds’ assets and have been their catalyst for growth. However, this trend began to notably shift around the year 2000, when institutional investors such as pension funds, governments, corporations, and insurers started significantly increasing their allocation to hedge funds. The shift was the result of hedge funds’ ability to source an alpha typically not associated with traditional markets to investors who were seeking to diversify their portfolios and hedge against adverse market conditions. Over the past decade and a half, institutional investors have grown to represent a significant portion of hedge fund assets.