Industry Updates

Hedge funds and private equity the alternatives of choice for US investors

Tuesday, June 14, 2022

Tweet
Print
Email
Track Keywords

Opalesque Industry Update - With Intelligence's investor intentions data from April 2022 identified private equity (72%) and hedge funds (54%) as the alternative asset classes most likely to see inflows from US investors in the coming months. And, as in our December 2021 survey, With Intelligence's Investor Intentions update suggests that investors believe that private equity and hedge funds have delivered strong performances during the recent upheaval and offer timely benefits in terms of risk management and niche opportunities.

There is little doubt that US allocators have had their heads turned by private markets in recent years. A host of institutions and private wealth investors have been recalibrating their alternatives portfolios to larger allocations in private markets and our survey of 434 investors comprising 68 family offices, 242 foundation/endowments, 36 corporate pensions, and 88 public pensions demonstrates this trend.

Hedge funds ended 2021 by posting a 10.2% gain and their first net inflow in more than five years of $25bn. But, more than that, the change of sentiment from December 2021 to April 2022 is striking and all asset classes saw a drop in likelihood to invest, with the biggest in private equity and equities - down 10% and more - and the smallest decline in real estate at 3%. Among investors, foundations/endowments are most enthused (76%) about private equity due to its capacity for disruptive, high-return impact as well as its record in seeking technological solutions to social issues like climate transition.

Key highlights from the report:

- 72% of US institutional investors are likely to invest in private equity over the next year; with 54% are likely to invest in hedge funds.

- 75% and 57% of family offices are likely to invest in private equity and hedge funds respectively over the next 12 months but are now least likely to invest in real estate due to concerns about the strong headwinds in the asset class.

- Consistency of team members was cited as one of the leading priorities for investors in manager selection by 69% of those surveyed. Other priorities include GPs having "skin in the game" (67%) and the quality of risk management protocols (52%).

- Corporate pensions lean towards real estate with 67% of respondents intending to invest over the next 12 months.

- US investors investing in hedge funds consider the US (68%) and Europe (52%) the preferred regions for investment.d net outflows respectively.

With Intelligence