Institutional investors in France just love hedge funds, with 5.3% of their total assets in the vehicles, compared with 1.9% average for the rest of the continent, according to a survey by Invesco. France’s love affair with hedge funds has heated up in just the past year, as institutional investors allocations have nearly doubled from 2.7% in 2005, well above last year’s continental average of 1.5%. Invesco, which polled 90 European institutions with €311 billion (US$412.4billion) AUM, also found that overall alternative investments is underwhelming. “Hedge funds, private equity and commodities remain marginal,” Invesco’s Yves Van Langehove said in a statement. “The growth is lower than expected.” Aside from France, other major countries have failed to light an alternatives fire; HF asset allocation in Italy and Germany, for example, were 1.6% and 0.9%, respectively, in 2006. What’s more almost 67% of those surveyed are not even investing in hedge finds, and of those that do, a mere 7% have increased their allocations by more than 2 percentage points – way below their intended percentages for bonds, equities and real estate. Real estate, says Invesco, has seen the biggest growth, especially with pension funds. According to Invesco, smaller institutions favored HFs more. “What is becoming clear,” said Langenhove, “is that hedge funds assets used by pension funds and insurance companies remain low.” More than eight of 10 respondents say they get their fill of hedge funds through funds of hedge funds for diversity. If there is any consolation, the survey found that respondents were not too keen on structured products or exchange traded funds, either.
