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42% of Japanese institutional investors plan to increase their allocations to hedge funds

Thursday, September 22, 2011

Stefan Nilsson
Opalesque Industry Update - 42% of Japanese institutional investors plan to increase their allocations to hedge funds in the near term according to a new investor survey by HFC Advisory.

HFC Advisory, a Tokyo-based consulting and research firm, interviewed a wide range of Japanese investors between May and August for the Hedge Funds Club Japan Investor Survey 2011.

“Japanese investors are by far the most important hedge fund investors in the Asia-Pacific region. The survey shows that investments in hedge funds are growing and that pension funds in particular keep increasing their allocations. Japanese investors are active investors in global alternative investment products but I feel that hedge fund managers need to better understand the needs of Japanese institutions in order to access this large market,” said Stefan Nilsson, CEO of HFC Advisory and founder of the Hedge Funds Club.

Investor survey highlights

42% of the investor respondents plan to increase their allocations to hedge funds in the near term.

Japanese pension funds keep increasing their allocations to hedge funds. The average allocation to hedge funds among the pension fund respondents to this survey was 21%.

Equity long/short was the most popular hedge fund strategy to allocate to in 2010/2011 while the global macro/managed futures category is the most popular for planned allocations in 2011/2012.

Most investors allocate the majority of their money to liquid strategies but there is also a fair bit of investments in less liquid strategies such as credit and distressed as well as other more niche strategies.

63% of the survey respondents said that they do not use any investment consultants.

Funds of funds (FoF) are still alive and have a future in Japan. While there is an increasing trend to do more direct investments in hedge funds, 58% of respondents said they that they do both single manager strategies and FoF or just allocate to FoF.

The main concerns expressed about hedge fund investments were liquidity, transparency and fraud.

(press release)

Download full survey from Opalesque:Source


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