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Deutsche releases new hedge fund survey
20 February 2014
Investors expect funds to reach record levels
Deutsche Bank’s 12th annual alternative investor
survey reveals that investors remain bullish on industry growth
– hedge funds are expected to reach a record breaking
$3trn by year end 2014 (up from $2.6tn last year) based on
investors’ predictions of $171bn net inflows and
performance-related gains of 7.3%.
Commitment from institutional investors continues to
strengthen, with nearly half increasing their hedge fund
allocations in 2013 and 57% planning to grow their allocations
in 2014. Institutional investors now account for two thirds of
industry assets, compared to approximately one third
The survey suggests that investors are happy with hedge fund
performance - 80% of respondents stated that hedge funds
performed as expected or better in 2013, after their
allocations returned a weighted average of 9.3% and 63% of
respondents (79% of institutional investors) are targeting
returns of less than 10% in 2014. Equity long short and event
driven are the most sought after strategies.
Investors are paying an average management fee of 1.7% and an
average performance fee of 18.2%. The survey also found that
39% of investors are embracing a risk-based approach to asset
allocation (up from 25% in 2013) and 41% of pension consultants
recommend this approach to clients.
This year over 400 investor entities participated in the
survey, representing more than $1.8trn in hedge fund assets and
over two thirds of the entire market by AuM.
Anita Nemes, global head of the Hedge Fund Capital Group at
Deutsche Bank, said, "With the majority of investors happy with
hedge fund performance, we expect institutional investors to
further strengthen their commitment to hedge funds. Last
year’s respondents targeted 9.2% for their hedge
fund portfolios and hedge funds delivered. Looking forward,
respondents are targeting 9.4% for 2014."