The global hedge fund market is likely to experience rapid growth and could even quadruple by the end of the decade, according to new resear...

The global hedge fund market is likely to experience rapid growth and could even quadruple by the end of the decade, according to new research from Cerulli Associates, a Boston-based consultancy.

This increase is expected despite poor performance, increased regulation and fraud that have beset the hedge fund world in the US and UK.

The drivers of future hedge fund growth will be demand for absolute returns, different investment techniques, and the need for a unique vehicle structure, according to the report.

However, greater access to retail investors will be the main determinant of the growth pattern.

“While high-net-worth investors are the traditional bailiwick of hedge fund managers, hedge funds have been unable to latch on to lower-net-worth investors, due not only to investor preferences, but also to lack of regulation and transparency. Nonetheless, the advent of fund of hedge funds (FOHFs) and hedge mutual funds greatly increases the availability and ease of the use for retail investors,” said Cerulli senior analyst Benjamin Poor.

The research also predicts that, despite increasing demand from institutions, hedge fund fees are not likely to decrease, although this may happen at fund of hedge funds where there is a double layer of charges.

“Those [single managers] who compete on price may not be around in five years,” the report said.