Hedge funds that are short on cash but long on potential are getting financial help from institutional investors who provide seed money in return for a piece of the action, Bruce Lipnick, founder and CEO of Asset Alliance, told Markets Media.
"Our core business is to acquire, seed and help grow the hedge funds we invest in," he said. "We see a lot of pensions and endowments that are cutting back on private equity exposure and increasing their allocations to smaller, emerging hedge funds," said Lipnick. "Most of the gains are coming from new managers as opposed to established multibillion dollar funds."
Asset Alliance provides seed capital to smaller hedge funds that are either starting out or are looking to replace capital that was withdrawn during the economic downturn. "We see an opportunity to help reseed hedge funds, including those with liquid investments and good track records."
Institutional interest in hedge funds is escalating. "New York's pensions fund is pulling back on private equity and increasing its allocations to newly launched hedge funds," Lipnick said. "Hedge funds are
positioned to attract greater institutional capital."