Deutsche Bank’s 12th Annual Survey Of Alternative Investors
By Damien Hatfield on May 14, 2014 in Hedge Funds
Deutsche Bank has released the results of its 12th annual survey of investors in alternative class assets.
The highlights include…
• Investors remain bullish on industry growth – hedge funds are expected to reach a record $3 trillion by year-end 2014, up from $2.6tn as of 2013 year-end. This is based on investorsʼ predictions of $171 billion net inflows and performance-related gains of 7.3% (representing $191 billion).
• Commitment from institutional investors continues to strengthen – nearly half of institutional investors increased their hedge fund allocations in 2013 and 57% plan to grow their allocations in 2014. Institutional investors now account for two thirds of industry assets, compared to approximately one third pre-crisis.
• Investors are happy with hedge fund performance - 80% of respondentʼs state that hedge funds performed as expected or better in 2013, after their allocations returned a weighted average of 9.3% in 2013. 63% of respondents, and 79% of institutional investors, are targeting returns of less than 10% for their hedge fund portfolios in 2014. Equity long short and event driven are the most sought after strategies.
• 2 & 20 is not the norm – Investors today pay an average management fee of 1.7%, and an average performance fee of 18.2%. While fees have come down slightly, investors remain willing to pay for performance.
• A bigger part of a bigger pie – hedge funds get reclassified. 39% of investors are now embracing a risk-based approach to asset allocation, up from 25% in 2013. 41% of pension consultants recommend this approach to clients. The risk-based approach effectively removes historical constraints on the percentage allocation to absolute return strategies, allowing equity long/short managers to compete with long only equity funds. While fixed income absolute return funds are placed within the overall fixed income risk budget.
Over 400 investor entities participated, representing over $1.8 trillion in hedge fund assets and over two thirds of the entire market by assets under management (AuM). Approximately half (46%) of responding investors manage $1bn+ in hedge fund AuM, and 18% manage over $5bn.
Comments (0)
Trackback URL | Comments RSS Feed
There are no comments yet. Why not be the first to speak your mind.