16 February 2018

Hedgeweek: Investors have renewed optimism for hedge funds in 2018, says Deutsche Bank survey

Hedge fund investors are optimistic in their outlook for the industry in 2018, expecting hedge funds to receive USD41 billion in net new investor capital for the year versus USD10 billion last year. That’s according to Deutsche Bank’s 16th annual Alternative Investment Survey.

“It has been a transitional time for the hedge fund industry. We are seeing a shift in momentum with improved performance and positive flows,” says Greg Bunn, Global Co-head of Prime Finance at Deutsche Bank. “One in every two investors plans to grow their allocation to hedge funds in the next 12 months. We found that the average respondent expects to boost the size of their portfolio by USD129 million this year.”

Investors from 21 different countries across the EMEA, Americas and Asia Pacific regions, representing two thirds of industry assets, completed the survey. Compiled by Deutsche Bank’s Capital Introduction Group, the survey is one of the most comprehensive in the industry, focused on pension funds, sovereign wealth funds, endowments, foundations, insurance companies, consultants and funds of hedge funds.

Marlin Naidoo, Global Head of Capital Introduction and Hedge Fund Consulting at Deutsche Bank, says: “While investors are committing more capital to hedge funds as part of their overall portfolio, the competition for these dollars remains strong. This is because most investors expect to keep their number of allocations constant, creating a “one in, one out” scenario. Fund managers need to continue to differentiate themselves via outperformance, bespoke fee arrangements and uncorrelated investment strategies.”

The context in which investors responded to the survey was after a strong year for risk assets globally. Many equity indices ended the year at or close to multi year highs. In addition, the hedge fund industry ended the year up high single digits, posting the best annual performance since 2013.

Ashley Wilson, Global Co-Head of Prime Finance and EMEA Head of Equity Trading at Deutsche Bank, said: “Investors appear more optimistic in their outlook for Europe and Asia. Our survey indicates that investor interest in European hedge funds has more than doubled year on year and that thirty per cent of respondents are planning to add exposure to Asia. These regions provide more alpha opportunities across multiple countries with diverse market structures.”

Full news

© Hedgeweek