LONDON (Reuters) -The BlackRock Investment Institute believes investors should bulk up their exposure to hedge funds, the company said on Thursday.

The research arm of the asset manager suggests investors dedicate up to 5% of their portfolios to hedge fund investments, the highest the institute has ever recommended.

Investors might take money from holdings in developed market government bonds and instead use this money for less risky hedge funds, it said in a note.

Allocators comfortable with a bit more risk could take money from the stocks portions of their portfolios and instead redirect that money at higher risk hedge funds.

The asset manager side of BlackRock, which also acts as a middleman for investors wanting to spend money on hedge funds, oversees $76 billion in hedge fund asse

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