Abstract
Hedge funds and their managers, once obscure enigmas of the investment community, have become in the last decade household names due to their overwhelming publicity as money-hungry madmen. Part of the reason why these loosely regulated funds have drawn so much attention is because their explosive growth in assets under management has rendered them a financial force to be fully cognizant of. Indeed, hedge funds are estimated to hold some $1.7 trillion in AUM today, and one of the biggest contributors to this growth has been the entry of major institutional investors. Since 1999, when high-net worth individuals represented some 80% of hedge funds investors, institutions such as pension funds and university endowments have made their presence felt and are now estimated to represent 50-60% of all hedge fund assets (Economist). The implications of this shift in investor base are significant and will ultimately shape the direction in which the industry goes in coming years.
