Opalesque Industry Update - Preqin's surveys of hedge fund investors find that many report increasing difficulty in finding attractive funds in which
to invest. Almost half of investors said in June* that they were planning to reduce their allocations to hedge funds over
the next 12 months. Of these, 38% said that three-year performance was the driving factor behind the decision, while
a further 16% said their outlook on future performance was negative. When looking to make new fund commitments,
investors are faced with a wide dispersion of returns within and between different leading hedge fund strategies. With
almost 15,000 hedge funds currently open to investment worldwide, this poses a significant challenge to investors
seeking to expand or modify their hedge fund portfolios. Key Hedge Fund Investor Facts:
Amy Bensted, Head of Hedge Fund Products: "Hedge fund investors recognise that the performance of the industry has made some progress over the past year, but they still have serious concerns over the returns generated by funds in their portfolios. Despite the industry posting 11 months of gains in the 12 months to the end of June, half of investors report that half of their portfolio has not met their expectations. Over the longer term, this is even more pronounced: 70% of investors feel that three-year performance has failed to meet their requirements. Given this dissatisfaction, it is not surprising that underwhelming three-year returns are the foremost reason investors give for reducing allocations. This process is likely to involve reallocation or rebalancing, but in this regard investors are faced with a number of significant challenges. The dispersion of returns between different leading hedge fund strategies is wide, and with thousands of funds pursuing each strategy there is great variance within each as well. There are now almost 15,000 hedge funds open to investment, far more than can be evaluated individually by institutions, and so building an effective portfolio that meets their needs is becoming an ever-larger task." |
Industry Updates
Preqin: Investors struggle to source attractive hedge funds
Thursday, September 28, 2017
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