Key Takeaways
- • Pension funds accounted for almost 30% of hedge fund investors at the end of 2022, the smallest share since 2018 and the lowest level in five years, according to a Goldman Sachs survey cited by Reuters.
- • Pensions remain the largest client base for hedge funds despite the declining share.
- • Sovereign wealth funds in Asia-Pacific and Europe contributed new money to hedge funds in those regions.
- • Goldman Sachs said allocations were likely weighed down by frustrations built up in prior years, even though hedge funds performed strongly in 2022.
Summary
The share of hedge fund assets attributed to pension fund investors fell to its lowest level in five years at the end of 2022, according to a report by Reuters citing research from Goldman Sachs. A Goldman Sachs note published on Wednesday based on its latest survey showed that pension funds made up almost 30% of the hedge fund industry's investors at year-end, the smallest proportion since 2018.
Despite the decline, pensions remain the largest client base for hedge funds. Hedge funds in the Asia-Pacific region and Europe also drew new capital from sovereign wealth funds domiciled in those regions.
The decline is notable because hedge funds delivered strong performance in 2022. Goldman Sachs suggested that frustrations accumulated in prior years may have continued to weigh on allocation decisions, quoting its note: "In spite of the strong hedge fund performance they experienced in 2022, it appears that frustrations built in prior years may have continued to weigh on allocations."
Despite the decline, pensions remain the largest client base for hedge funds. Hedge funds in the Asia-Pacific region and Europe also drew new capital from sovereign wealth funds domiciled in those regions.
The decline is notable because hedge funds delivered strong performance in 2022. Goldman Sachs suggested that frustrations accumulated in prior years may have continued to weigh on allocation decisions, quoting its note: "In spite of the strong hedge fund performance they experienced in 2022, it appears that frustrations built in prior years may have continued to weigh on allocations."
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