Deutsche Bank has published its tenth annual Alternative Investment Survey, which was conducted in December 2011 by the Bank’s Global Prime Finance business.
Approximately 400 investor entities worldwide, representing more than USD1.35 trillion in hedge fund assets and over two thirds of the entire market by assets under management (AUM), participated in the industry’s largest and longest standing comprehensive hedge fund investor survey.
Nearly half of the investors surveyed individually manage and/or advise over USD1bn in hedge fund assets. Respondents include public and private pensions, foundations and endowments, government organisations, funds of funds, private banks, investment consultants and family offices. To commemorate its tenth anniversary, this year’s survey includes ten trends to watch in the hedge fund industry.
“The past 10 years have seen hedge funds add an impressive USD1.39tn in assets,” says Barry Bausano (pictured), Co-Head of Global Prime Finance and Head of Equities in the Americas. “Investors are committed to top performing managers, with cash holdings potentially adding an extra USD39bn to the industry over the next six months.”
“Performance continues to be key, and an increasing number of institutional investors recognise the added benefits hedge funds offer to their portfolios,” says Anita Nemes, Global Head of Capital Introduction. “An impressive 80% of institutional investors either grew or maintained their hedge fund holdings in 2011 in a bullish endorsement of the hedge fund industry.”
Highlights of Deutsche Bank’s tenth annual Alternative Investment Survey:
Investors predict continued growth, with an estimated net inflow of USD140bn in 2012, taking industry AUM to an all time high of USD2.26tn by year end.
Increased institutional participation is driving growth as hedge funds become an established and formidable part of the investment landscape. Institutions now account for approximately two thirds of hedge fund assets compared to less than one fifth in 2003.
Consolidation will continue and large, successful funds will become even bigger. 44% of respondents are invested in managers with over USD1bn in AUM, up from 25% in 2009. Nearly a third of respondents plan to allocate to managers with more than USD1bn in AUM.
Performance has consistently ranked as a key criterion for manager selection over the past 10 years. 80% of respondents ranked performance as one of the five most important factors this year, as investors remain committed to seeking talented, top performing managers irrespective of size.