Opalesque Industry Update – The negative perception towards hedge funds prevailing in 2008 and early 2009 is completely gone as the number of investors, distributors and fund managers who are bullish on the industry has jumped significantly, according to a survey made by Asian Investor and international law firm Clifford Chance.|
Matthias Feldman, a partner in Clifford Chance’s fund practice in Hong Kong said, “The negative feeling towards hedge funds is over,” as he noted that the number of respondents who thought hedge funds would receive an increase in inflows more than doubled to 33% compared with 16% of those polled in 2009.
In the Asian Investor / Clifford Chance survey, respondents, which include investors, distributors, fund-management executives and service providers, were asked to select three types of instruments. Some 64% chose equities, up from 47% from the 2009 survey. Last year, the preferred vehicles included bonds and distressed/opportunity funds.
A partner at the law firm James Walker told Asian Investor that the Asian hedge fund industry had matured. This was evidenced by the flows of business in Asian hedge funds particularly in China. He added that most Asia hedge funds are focused on attracting institutional investors.
Asian hedge funds may be right on the track for that. Pensions & Investments reported last month that inflows from global institutional investors are forecasted to be extremely strong this year.
Investors more optimistic about hedge funds in 2010
Moody’s Investor Services expressed the same optimism in February this year, but warned of many challenges ahead. The ratings agency said that the hedge fund industry would successfully adapt to the new market conditions. It forecasted higher investor confidence in fund allocation, net inflow, more start ups and continued expansion of product offerings (See Opalesque Exclusive: Hedge fund industry improving but many challenges remain, says Moody’s here).
U.S. based asset manager BlackRock was the first to notice investors’ renewed interest into hedge funds. In January, BlackRock, with $3.5bn in AuM, said that investors were putting large sums of money into hedge funds after its BlackRock Alternative Advisors fund of funds attracted net inflows of $0.9bn during the last quarter of the 2009 (See Opalesque Exclusive: BlackRock's Fink bullish on alternatives growth - 'investors are putting large sums of money back into hedge funds' here).
In the same month, several major financial experts predicted more allocations to hedge funds in 2010 at the expense of equities. At a seminar sponsored by international offshore law firm Walkers in New York City, industry experts said that hedge funds would see allocations to different strategies. In particular, Asia is expecting a 75% rise in allocations from U.S. pension funds (See Opalesque Exclusive: Industry experts predict more hedge funds allocations, more market discipline and due diligence in 2010 here).