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Laxman Pai, Opalesque Asia: An increasing number of allocators are integrating hedge funds into their overall portfolio, said Credit Suisse's 2019 survey of hedge fund investors. Credit Suisse polled 311 global institutional investors with $1.12tn in hedge fund investments.
42% of investors now categorize hedge fund allocations by an underlying asset class (eg. Equities, Fixed Income) instead of the static, 'Alternatives' tag, said the survey.
Capital continues to flow to non-traditional products. 58% of allocations over the past 12-18 months were directed to alternative structures, principally Bespoke Managed Accounts and Co-Investments.
Growing interest in customized mandates has led investors to optimize their existing hedge fund relationships, developing holistic partnerships with a concentrated group of managers. The result is a consolidation of hedge funds in allocator portfolios, where the average number of managers in a portfolio (31) is down 35% from 2009.
Redemptions from managers will largely be recycled and stay in the industry, the survey pointed out.
89% of investors who redeemed from hedge funds in 2018 expect to recycle that capital to other hedge funds, with an increasing amount accruing to managers already in an allocator's portfolio.
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