Goldman Sees Hedge Fund Rebound

NEW YORK (TheStreet) -- Goldman Sachs (GS) sees institutions allocating more money to hedge funds, the investment bank stated in a report Wednesday.

The report was on Och-Ziff Capital Management Group (OZM), one of the few publicly-traded hedge funds. Goldman analysts view Och-Ziff "as a share gainer as institutions migrate back to hedge funds -- a trend we expect to accelerate over the coming quarters," the report stated.

Och-Ziff's publicly-listed competitors Blackstone Group (BX) and Fortress Investment Group (FIG) are better known as private equity firms, though they have large hedge fund divisions, as do Goldman and other large banks like JPMorgan Chase (JPM) Citigroup (C) and Morgan Stanley (JPM).

These banks, and others like Bank of America (BAC) and Barclays (BCS) would also benefit from a hedge fund revival through their prime brokerage businesses, which provide services to hedge funds.

Total assets invested in hedge funds grew from $490 billion in 2000 to a peak of $1.87 trillion in 2007, according to estimates from Hedge Fund Research (HFR), which tracks the industry. The industry now stands at $1.54 trillion through the third quarter, having lost $154 billion in 2008 and $145 billion so far this year, according to HFR.

-- Written by Dan Freed in New York.

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