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Private wealth inflows buoy hedge fund assets to USD2.9trn

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Three quarters (73 per cent) of hedge fund managers say competition in fundraising has increased in the past 12 months, according to a survey by Preqin.

However, 64 per cent of fund managers that run pooled products noted that their assets in these products had increased in the first half of the year.
 
Similarly, 61 per cent and 50 per cent of firms that manage alternative UCITS and alternative mutual fund products respectively reported net inflows to these vehicles.
 
Only 12 per cent of managers of pooled hedge funds noted their assets in these funds had decreased in H1 2014, and 10 per cent of alternative mutual fund managers reported the same. No managers reported outflows from their UCITS products.
 
Some 37 per cent of fund managers believe that the proliferation of liquid alternative funds will increase inflows to all products, as these attract more investors to hedge fund strategies. 

 
A total of 59 per cent of fund managers with backing from high-net-worth individuals reported they had seen inflows from these investors in the first half of 2014.
 
As a result of large inflows from private sources, institutional capital now represents 63 per cent of all hedge fund assets. This is a decrease from 65 per cent as of the end of 2013.
 
Some 43 per cent of fund managers have some capital from retail clients, and 47 per cent of these reported increased amounts of capital from this source in H1 2014.
 
A total of 36 per cent of respondents stated that there would be a significant increase in the amount of capital from retail clients in the next three years, while 46 per cent believe there will be an increase but it will be small.
 
“Although the first half of the year has been rocky, with performance proving underwhelming and investor satisfaction with the industry starting to wane, it has nevertheless been a successful one for many managers,” says Amy Bensted, head of hedge fund products at Preqin. “Across all types of hedge fund products offered by the managers which participated in Preqin’s most recent study, more firms reported that they had seen asset inflows than had seen outflows. The industry now stands at USD2.9tn in assets under management as of 31 July 2014, up from USD2.66tn in assets at the end of 2013.
 
“Interest from a wider group of investors, particularly those in the private wealth arena and retail clients, is leading to a proliferation of new structures, in particular liquid alternatives, to cater to new markets. This is providing more product options to all hedge fund investors and has been a notable driver in the growth in assets in the hedge fund sector. Looking forward to the end of 2014, 77 per cent of the hedge fund managers that participated in our June study stated that they believe industry assets under management will grow further in the second half of the year.” 

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