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Alternative Market Briefing

2021 could be "breakout year" for hedge funds, says Barclays

Thursday, February 25, 2021

Laxman Pai, Opalesque Asia:

Hedge funds could draw between USD10 billion and USD30 billion of projected net inflows from investors, and around USD450 billion in gross allocations, in what could prove "a breakout year" for managers, said Barclays in a research report.

"Hedge funds could be set for a rush of new capital pouring into the industry this year - potentially reaching up to USD30 billion - as investor appetite grows following strong 2020 performances," revealed the bank's '2021 Global Hedge Fund Industry Outlook and Trends' report.

The report found that allocator sentiment towards hedge funds is the strongest it's been since 2014, with 41 percent of all investors planning to increase their hedge fund exposure this year.

The annual hedge fund investor survey quizzed 240 firms representing USD5 trillion in assets, including USD725 billion of hedge fund investments - roughly 22 percent of total industry capital.

"Now, with significant cash sitting on the sidelines, all investor types indicated plans to put more capital to work. Hedge funds were second only to private equity/venture capital as the preferred asset class, with 41% of investors indicating they plan to increase their hedge fund exposure," it said.

While all investor types plan to be net allocators to hedge funds in 2021, Family Offices and Private Banks indicated the most bullish plans for the year. The key drivers of allocations to hedge funds differ across investor type......................

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