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29% of institutional investors intend to increase hedge fund investment over the next 12 months - Preqin survey

Tuesday, August 10, 2010
Opalesque Industry Update - Preqin surveyed 50 global hedge fund investors from various institutions on their current hedge fund portfolios and their investment plans for the next 12 months.

Key findings include:

  • 29% of surveyed investors plan to allocate more capital to hedge funds over the next 12 months. 56% plan to invest the same amount in the asset class and just 15% plan to make cuts to their hedge fund portfolios.
  • 26% of institutional investors are below their target allocation to hedge funds. 64% of those surveyed are at their current targeted exposure and 10% are currently over-exposed to hedge funds.
  • 37% of institutional investors intend to increase the number of relationships they have with hedge fund managers over the next 12 months. 53% intend to maintain the current number of funds they are invested with and 10% plan to reduce the number of managers they invest with.
  • Over the longer term (three to five years), 46% of surveyed investors intend to increase their exposure to hedge funds.
  • 69% of investors feel that the hedge funds within their portfolios have either met or exceeded return expectations. This is a drop from 73% of investors in a similar survey conducted in 2009.

“Despite a slight drop in investor satisfaction in hedge fund returns over the past 12 months, institutional investors are beginning to invest more capital in hedge funds in greater numbers than they were a year ago. With 29% of institutional investors planning to allocate more capital to hedge funds in the next 12 months and just 15% looking to make cuts, the balance of inflows into the asset class is positive. Furthermore, 37% of institutional investors are planning to add new funds to their portfolio in the next 12 months and are actively seeking relationships with new fund managers.

The long-term outlook for the asset class is even more positive, with 46% of investors planning to increase their exposure to hedge funds over the next three to five years. It is clear that institutional investors still believe hedge fund investments are a valuable part of their portfolios. Recovery in terms of asset flows into the industry has already begun and the Preqin survey suggests it is likely to increase steadily over the medium to long term”. Download the full report from Opalesque: Source

- FG

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