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Hedge funds 'could have great 2014'
20 January 2014
Investors intend to keep or increase hedge fund allocations, according to new research
Hedge funds could see a substantial rise in net inflows over the next 12 months despite disappointing performance across some funds in 2013.
A survey by Barclays’ prime services business of 190 investors representing $490bn AuM, revealed the hedge fund industry could receive up to $80bn in net flows this year.
That figure would represent an increase of almost 25% from 2013, and the largest amount since 2007.
“2014 could be a great year for hedge fund asset raising,” said Lou Molinari, head of capital solutions. “While almost half of our surveyed investors felt that hedge funds performed poorly relative to their expectations in 2013, there appears to be no negative impact. More than 90% of even these disappointed investors plan either to maintain or increase their current hedge fund allocations.”
Some 60% of net flows is predicted to come from institutional investors, and the majority (45%) is expected to comprise public and private pension funds.
Private investors such as private banks and wealth managers are likely to comprise the remaining 40%.
Investors said they intend to allocate more than half of their net flows to equity long/short strategies.
Event-driven equity and global macro strategies are likely to remain popular, while fixed income relative value and credit strategies “should be prepared to fight for reallocations,” said the report.