Institutional interest in foreign exchange and currency hedge funds on the increase

by Amy Bensted

  • 23 Aug 2010
  • HF

Although not traditionally a common strategy used by institutional investors, foreign exchange and currency hedge funds have become increasingly attractive as investors expand their hedge fund knowledge and place greater emphasis on portfolio liquidity. 8.5% of investors on the Preqin Hedge Investor Profiles database state a preference for this type of investment. The majority of investors commit to these funds directly rather than through funds of funds. Most of the capital for these funds comes from North America, a region that includes some of the most experienced hedge fund investors, which are more likely to diversify their portfolios and invest in niche strategies. A considerable 25% of investors in these funds are based in Europe and if demand for increased hedge fund liquidity continues, it is likely that the strategy will gain a more global appeal. Foreign exchange and currency hedge funds obtain most of their capital from endowment plans and fund of hedge funds managers.

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