According to research by The Alternative Investment Management Association (AIMA), institutional investors such as pension funds and university endowments now account for more than half of the estimated $1.4 trillion hedge fund industry's assets, surpassing wealthy individuals.

Three years ago institutions represented an estimated one-third of all assets under management.

While high net worth individuals have traditionally been the main backers of hedge funds, investors such as pensions, endowments, foundations and governmental authorities have slowly been raising exposure to this asset class in the hope of positive returns in all market conditions.

The research was based on extensive consultation with its members, AIMA said.