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Alternative Market Briefing

Expecting equity correction, majority of hedge fund investors to maintain or increase allocation

Friday, February 23, 2018

Komfie Manalo, Opalesque Asia:

Data provider Preqin said that for the first time since December 2014, the proportion of investors that plan to decrease their exposure to hedge funds does not outweigh the proportion intending to increase their exposure. The largest proportion of investors since December 2013 (27%) are planning to increase their allocations to the asset class in 2018, and almost half (46%) are planning to maintain them over the next 12 months.

At the same time, there is a widespread sentiment amongst hedge fund investors that the public equity markets may correct in the year ahead, with 45% of them believing that equities markets are at a peak as of the end of 2017, and 5% think they are already in a recessional phase.

Amy Bensted, head of hedge fund products, commented, "Having faced an extended period of low investor confidence and net capital outflows, the hedge fund industry is now experiencing a renaissance among institutions. 2017 saw the asset class mark four quarters of net inflows, and at the start of 2018 the highest proportion of investors in five years are planning to increase their exposure over the year ahead. This may be largely due to an expected correction in equity markets: half of investors now feel that the long bullish phase of recent years is close to ending - a sentiment seemingly confirmed by rising volatility in recent weeks. In these circumstances, hedge funds provide a valuab......................

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