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Hedge funds' confidence level remains resilient

Monday, April 04, 2022
Opalesque Industry Update - From AIMA's Q1 2022 Hedge Fund Confidence Index report:

Confidence levels reported by hedge funds remain resilient despite a number of prevailing headwinds impacting the global economy, including the war in Ukraine and subsequent economic sanctions being imposed, consumer price inflation being at a 40-year high, not forgetting new regulatory and compliance demands.

Through the end of February, hedge fund returns have been mixed. While some fund strategies have experienced a challenging start to the year, others have thrived. Undoubtedly performance dispersion across the industry has become even more pronounced.

Upon closer examination of the hedge fund strategies that we polled, global macro (+19) and multi-strategy (+18) reported the highest confidence scores. It is therefore little wonder why both were voted as being among the most popular strategies that investors would allocate to in the first six months of this year.

As we close the quarter, indications are that investors have made good their intentions, with industry vendors suggesting that there have been net inflows over the quarter.

Elsewhere, regulatory and compliance headwinds across the industry have intensified, in particular for private funds following a series of proposals announced by the SEC in March. If approved in their current form, they would represent a serious overhaul of existing market practices, with potentially disruptive consequences.

Despite these challenges and the threat of more still to come, the industry's global confidence score for Q1 reflects the fact that hedge funds are reinforcing their value proposition of offering investors financial security and uncorrelated returns during uncertain times.


The full Q1 report with score breakdowns by region and strategy together with quotes from AIMA, Simmons & Simmons, and Seward & Kissel can be downloaded here:

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