Are Hedge Funds an Asset Class?

The growing use of hedge funds in institutional portfolios has raised the issue of whether hedge funds should be considered a separate asset class. Although hedge funds do not satisfy the traditional criteria for an asset class, fiduciaries may need to segregate them in policy to reflect their special characteristics.

This edition of our Fiduciary Insights series, Are Hedge Funds an Asset Class?, examines the evolving role of hedge funds within institutional portfolios and explains why their unique features may require distinct policy treatment. The paper explores structural differences, portfolio applications, and the governance considerations that arise when incorporating hedge funds into an investment program.