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Alternative Market Briefing

Institutional investors increase allocations to hedge funds but want to see greater risk controls - survey

Thursday, March 31, 2016

Bailey McCann, Opalesque New York:

Context Summits latest allocator survey shows that institutional investors plan to increase their allocations to hedge funds but want to see greater risk controls. 81 percent of investors say they want to see a clear investment process from managers and 71 percent said they want to see better risk management. Allocators say they are still looking at performance, but want to also see a business in place. Firm AUM came in last as a factor in whether or not to invest with only 36 percent of respondents saying it was important.

The pool of respondents for the survey included fund of funds, family offices, pensions, endowments and investment consultants.

In all, eight out of ten of the survey respondents said that they plan to increase their allocations to hedge funds this year with nearly 40% of that group saying they plan to allocate to five or more funds. The rate of hedge fund redemptions is also expected to decline as investors adopt more defensive positions over the rest of this year.

"We believe this year presents a unique opportunity for many managers to distinguish their story and attract institutional capital," said Mark Salameh, CEO and co-founder of Context Summits, of the survey.

Even with renewed interest in hedge fund investing, institutions are still concerned about finding sources of alpha and about other macroeconomic headwinds that could impact portfolio performance. Respondents cited China's economy, th......................

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