"The hedge fund industry has been under pressure to offer lower fee alternatives for some time," said Sol Waksman, founder and president at BarclayHedge. "We expect that these pressures will continue and that low or no fee products will continue to grow."

The BarclayHedge survey was conducted between July 17 and July 28 and received 134 replies from a broad range of hedge funds managers.

Equity bias with rising neutral sentiment

Also in the survey, managers continue to favor equity markets as the asset class most likely to outperform and confidence in developed markets fell to the lowest level since 2013. Overall, managers are less positive on the U.S. Dollar and Crude Oil but more bullish on Gold.

Specific survey results include:

• S&P 500: Neutral sentiment continued to climb and at 45.9% is at the highest levels since April 2014. Both Bullish and Bearish opinions fell but the greatest change has come with Bearish sentiment which was 23.9% in July after being at 45.9% just 4 months ago.

• 10-Year U.S. Treasuries: Managers maintain a neutral stance at 48.1% but Bearish sentiment has been rising, hitting 29.8% in July after a low of 14.9% in May.

• U.S. Dollar Index: Little change from managers as Neutral sentiment predominates at 52.0%. Bullish opinions, which were as high as 60% in November, remain in the low range at 23.5%.

• Leverage: Standing pat predominates as Hold Steady hits a new high of 79.0%. There is a slight but within normal bounds bias of 4.6% to Increasing Leverage.

• Asset Classes: Equities continue to lead at 50.0%, getting back to levels last seen in January 2017. Sentiment for Short Term Bonds shifted from 25.5% to 9.4% in June and Long Term Bonds fell slightly as well. Precious Metals rose 9.9% to 29.3 from June, well within recent bounds of sentiment.

• Global Markets: Confidence in Developed Markets fell to the lowest level since February 2013 but still remain above 50%. Frontier Markets dipped slightly while Emerging Markets rose 9.3% to 38.9%.

• Gold: Little change from recent ranges as an Up bias rose and Down fell. Still, negative sentiment of 14.8% is near five year lows for the survey.

• Oil: Sentiment stayed within recent bounds with bullish and bearish opinions in close proximity. Over the past several months, however, neutral opinion has waned (47.6% in April to 34.3% in July) as negative opinions have grown (from 23.8% to 34.3% in the same period).