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Alternative Market Briefing

Credit Suisse investor survey reveals increasing capital flows to hedge funds and alternatives

Thursday, May 02, 2019

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.

Performance and downside protection remain paramount evaluation factors for established firms. For new launches, pedigree and performance were most valued, along with a new top fac......................

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