Preqin: Investor majority confident in hedge fund prospects
31 August 2018 London
Image: Shutterstock
The majority of investors are reporting satisfaction with the performance of hedge funds as an asset class, according to Preqin’s latest survey of alternative assets investors, carried out in June.
Around 45 percent of investors allocate to hedge funds, and two-thirds found that performance had met or exceeded expectations over the past 12 months, Preqin found.
Preqin said: “This marks a significant switch in sentiment from June 2016, when 79 percent of investors felt that hedge fund performance had fallen short of expectations.”
It added: “Looking ahead, almost a third (32 percent) of investors believe their hedge fund portfolio will perform better in the next 12 months compared to the previous year, and over half (51 percent) expect returns to be about the same.”
Over two-thirds (69 percent) of investors planning to allocate to the asset class expect to make their next hedge fund investment in the second half of this year, while 16 percent are looking to invest in 2019.
The majority (63 percent) of investors view North America as presenting the best opportunities in the year ahead, while 28 percent are looking to Asia.
Amy Bensted, Preqin’s head of hedge funds, said “Investor satisfaction with the performance of their hedge fund investments points to the fact that, even though the industry has not seen the exceptionally strong performance this year, over the longer term hedge funds have been able to generate positive returns.”
She added: “However, investors are concerned that equity markets could be approaching a peak, and with the instability of the political and macroeconomic climate it has been difficult to generate consistent momentum.”
“Investors perceive several benefits of hedge funds, citing diversification, low correlation to other asset classes and high risk-adjusted returns as key reasons to invest in the asset class. It is perhaps due to the current volatility in the market that four out of five investors expect hedge fund performance to maintain or improve in the coming year.”
Around 45 percent of investors allocate to hedge funds, and two-thirds found that performance had met or exceeded expectations over the past 12 months, Preqin found.
Preqin said: “This marks a significant switch in sentiment from June 2016, when 79 percent of investors felt that hedge fund performance had fallen short of expectations.”
It added: “Looking ahead, almost a third (32 percent) of investors believe their hedge fund portfolio will perform better in the next 12 months compared to the previous year, and over half (51 percent) expect returns to be about the same.”
Over two-thirds (69 percent) of investors planning to allocate to the asset class expect to make their next hedge fund investment in the second half of this year, while 16 percent are looking to invest in 2019.
The majority (63 percent) of investors view North America as presenting the best opportunities in the year ahead, while 28 percent are looking to Asia.
Amy Bensted, Preqin’s head of hedge funds, said “Investor satisfaction with the performance of their hedge fund investments points to the fact that, even though the industry has not seen the exceptionally strong performance this year, over the longer term hedge funds have been able to generate positive returns.”
She added: “However, investors are concerned that equity markets could be approaching a peak, and with the instability of the political and macroeconomic climate it has been difficult to generate consistent momentum.”
“Investors perceive several benefits of hedge funds, citing diversification, low correlation to other asset classes and high risk-adjusted returns as key reasons to invest in the asset class. It is perhaps due to the current volatility in the market that four out of five investors expect hedge fund performance to maintain or improve in the coming year.”
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