Industry Updates

Deutsche Bank Alternatives Survey finds 80% of investors say they will not allocate to managers who have gated funds

Tuesday, March 16, 2010

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Opalesque Industry Updates - Deutsche Bank announced the results of its eighth annual Alternative Investment Survey. Survey respondents represent asset management companies, corporations, family offices, high net worth individuals, foundations, endowments, fund of funds, insurance companies, investment consultants, private banks and private and public pension plans. The Bank’s Hedge Fund Capital Group, within its Global Prime Finance business, conducted the survey during January 2010.

“In 2009, the hedge fund industry experienced its best annual performance in a decade, and investors predict continued strength in 2010,” said Barry Bausano, Co-Head of Global Prime Finance. “Investors predict inflows of $222 billion this year, which would increase the total amount of hedge fund assets under management to approximately $1.722 trillion by 2011.”

“The hedge fund industry weathered the global financial crisis and matured as a result,” said Jonathan Hitchon, Co-Head of Global Prime Finance. “Risk management remains a top consideration for investors when assessing a hedge fund manager, and investors are increasingly using consultants to perform specialist operational due diligence.”

Highlights of Deutsche Bank’s Eighth Annual Alternative Investment Survey
52% of investors predict equity long/short to be one of the best performing strategies for 2010, and 51% believe they will increase their allocations to the strategy.

Survey participants are looking to reduce their cash levels over the next 6 months by $3.09 billion, and 29% have 10% or upwards of cash available to allocate to hedge funds.

While the hedge fund industry has proven resilient, investors have not forgiven management’s behavior during the crisis: 80% of investors will not make a new allocation to a manager who has frozen or suspended assets in the past. There is a continued appetite amongst investors for managed accounts: 14% currently use managed accounts and 26% of investors are likely to in the Investors remain reluctant to allocate to small start-up funds, with 50% requiring the start-up to have at least AUM $100 million before investing.

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