Family Offices, Private Banks And Other Institutions Seen As "Strong" Allocators To Hedge Funds In H2

Tom Burroughes

18 July 2014

Following recent data suggesting a pickup in returns after a weak start to 2014, a new report from said that the second half of this year will be a “strong period” for capital allocations to hedge funds.

The Swiss bank surveyed 284 institutional investors such as fund of funds; family offices; consultants; endowments; private banks, pension funds and insurance companies. Over 57 per cent of responses came from the Americas, while 34 per cent came from Europe, Middle East and Africa-based investors and 9 per cent came from the Asia-Pacific region. Together, these respondents oversee $544 billion of hedge fund assets.

Of the investors surveyed, 97 per cent indicated they plan to be highly active in making allocations during the second half of this year. This is up from 85 per cent of investors who responded that they had already been active in making allocations in the first half of the year.

The top three strategies by net demand (percentage increasing allocation – percentage decreasing allocation) on a regional basis were:

-- Americas: Event Driven (51 per cent), Long/Short Equity - Fundamental (46 per cent) and Emerging Markets Equity (28 per cent);
-- APAC: Event Driven (64 per cent), Long/Short Equity - Fundamental (56 per cent) and Equity Market Neutral – Fundamental (44 per cent);
-- EMEA: Event Driven (63 per cent), Long/Short Equity - Fundamental (29 per cent) and Global Macro (24 per cent).

Recent performance of the $2.7 trillion hedge fund industry has been relatively lackluster, although performance has picked up more recently, according to a report this week by Preqin, the research firm.