Citi to Expand Hedge Fund Advisory Team

(March 22, 2010) – As the global hedge fund industry begins to recover, Citigroup aims to double the size of its 30-person hedge fund consulting team within the next 18 to 24 months, according to Bloomberg.

“We see it as one of the major growth areas for us,” said global prime finance head Nick Roe to the news service in an interview. “The pension funds, the institutional asset market are going directly to hedge funds. It was the reverse of what the investor profile was two years ago,” said Roe, adding that as Citigroup is expanding its services from Europe and the U.S. to Asia, the region will likely get a higher percentage of the new additions.

Citi’s advisory team is responsible for helping pension and government-backed funds manage direct hedge fund investments. Two years ago, for example, the bank created a proprietary trading team for ATP, the Danish pension fund.

The increased demand for services to help manage hedge fund holdings is reflected in a November report released by Morgan Stanley that shows pensions, sovereign wealth funds and foundations are becoming the hedge fund industry’s biggest allocators. Gradually, these funds are bypassing the traditional methodology of fund-of-fund investment, moving toward direct investment in hedge funds.

In related news, a recent survey by Preqin shows hedge fund investment by institutional investors in the US are increasingly flocking toward European hedge funds. While British-based hedge funds account for most of the investments, other favored nations include Switzerland and France.