Many alternative fund managers expect performance and investment decisions to be affected following the UK’s Brexit vote, while institutional investors expect to commit less to the UK, according to a survey carried out by Preqin.
In the wake of Britain’s vote to leave the European Union, the firm surveyed over 140 alternative assets firms and 50 institutional investors to gauge their reactions and expectations following the result.
The largest proportions of fund managers do not expect their performance or investment decisions to be impacted by Brexit, but hedge fund managers anticipate being able to benefit in the short term as they capitalise on market volatility. Investors are taking a cautious approach, with more than a quarter of investors overall expecting to invest less in the UK in the wake of the result.
According to the survey, in the next 12 months 19 per cent of surveyed private capital fund managers expect their performance to be negatively impacted by Brexit, while 13 per cent expect the impact to be positive. In the longer term, 9 per cent expect Brexit to have a positive impact on performance, and 13 per cent a negative impact. 

In addition, almost a third (32 per cent) of fund managers will look to invest less in the UK over the next 12 months, while 3 per cent anticipate investing more. In the longer term, 14 per cent each expect to increase and decrease their UK investments.
Although 13 per cent of hedge fund managers said that they thought it would be negative in the short term, 31 per cent expected the impact of Brexit on performance to be positive. In the longer term, almost a quarter (23 per cent) expect the impact to be positive, while no surveyed manager anticipated a negative impact. 

Twenty-one percent of fund managers will look to make more investments in the UK over the next 12 months, and 13 per cent will make more UK investments in the longer term. Just 11 per cent will reduce their investments in the short term, and 8 per cent will make fewer investments in the longer term. 

Thirty percent of private capital investors think the impact of Brexit on performance is negative, while 12 per cent think it is positive. Hedge fund investors are more optimistic; 22 per cent think performance will be negatively impacted, but 35 per cent think it will be positive. 

Less than 10 per cent of investors in both private capital and hedge funds think they are likely to invest more in the UK in both the shorter and longer term. Almost half (43 per cent) of private capital investors expect to invest less in the UK in the next 12 months, and 31 per cent in the longer term. Among hedge fund investors, those figures stand at 31 per cent and 24 per cent respectively. 

A quarter of private capital investors will also look to invest less in the EU over the next 12 months, while 6 per cent think they are likely to invest more. Overall, though, 70 per cent of alternative assets investors expect to maintain their EU investments in the short term, and three-quarters expect no change in the longer term. 

In the next 12 months, 2 per cent of investors will look to invest with more UK-based alternative assets firms, while 24 per cent think they are likely to invest with fewer. The same proportion expect to invest with fewer UK-based managers in the longer term, but no surveyed investor anticipates increasing investment with UK managers as a result of Brexit. 

