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“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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