New research from Deutsche Bank predicts the global hedge fund industry will manage more than $3 trillion in assets in 2015, as a rising number of investors eye Asia for returns.

The hedge fund industry is set to exceed $3 trillion in assets by the end of this year, according to a new survey by Deutsche Bank.

The forecast accounts for a further 7 per cent growth in industry assets over the rest of 2015, with 39 per cent of institutional investors expected to up their allocation to hedge funds. 

Investors continue to lean towards the largest managers, for whom assets have rocketed 141 per cent over the past seven years, compared to the 39 per cent asset growth experienced by those with less than $5 billion in managed assets, according to the survey. Deutsche Bank estimates that fewer than 200 hedge fund firms take up over two-thirds of industry assets.

On a global level, Asia is expected to edge its way up investors' lists. Those that plan on investing in the region jumped from 19 per cent to 30 per cent year-on-year. This includes 25 per cent that plan on allocating to China over the next year, compared to just 11 per cent last year.

India featured as another investor hotspot for 2015, with 26 per cent of respondents planning on increasing their exposure to the country, more than treble last year's figure.

Investors are taking a more conservative approach this year as they look for more predictable, risk-adjusted returns, the survey found. Those aiming for hedge fund returns of more than 10 per cent dropped, at 14 per cent.

“Hedge fund managers who continue to focus on alignment of interests with the allocator community will have an increasingly competitive advantage as our industry grows and evolves,” said Murray Roos, co-head of global prime finance at Deutsche Bank. “Reward for alpha generation and co-investment opportunities will be key factors in building strong partnerships between limited partnerships and general partnerships.”

Deutsche Bank's annual alternative investment survey deduced its results from 435 hedge fund investors from 26 countries, representing over $1.8 trillion in hedge fund assets under management.