Citi Prime Finance has released a global survey on institutional investor attitudes to hedge funds.   The study suggests global assets invested with hedge fund firms could rise from the current record $2.1 trillion to more than $5 trillion as a result of two emerging trends.

One – the potential for institutional investors to increase allocations to hedge fund strategies by $1.0 trillion in order to better insulate against risk and to help ensure more diversified portfolios.

Two – a “convergence zone,” in which hedge funds and traditional asset managers will increasingly compete head-to-head to offer a broad set of equity and credit strategies. As a result, there could be an additional $2.0 trillion in new allocations to hedge fund firms in the form of regulated alternatives and ‘unconstrained’ long-only products.

73 firms participated in the survey and represented $821 billion in assets allocated, managed or under advisement in the hedge fund industry.

http://citibank.com/icg/global_markets/prime_finance/business_advisory.jsp