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Credit Suisse Releases Mid-Year Hedge Fund Investor Survey
Institutional investors responded that they intend to remain active, with 88% indicating that they plan to make additional allocations to hedge funds during the second half of this year. This indicates that the industry may see continued significant levels of allocation activity in the second half of 2013.
In addition, respondents were asked to share their insights into whether they are planning to allocate, maintain or decrease allocations to various hedge fund strategies in the second half of this year. The top 3 strategies by net demand (percentage increasing allocation – percentage decreasing allocation) were:
• All respondents : Long/Short Equity- Fundamental (57%), Event Driven (47%) and Global Macro (39%)
• Americas : Long/Short Equity- Fundamental (58%), Event Driven (48%) and Global Macro (22%)
• Asia : Long/Short Equity- Trading (50%), Long/Short Equity- Fundamental (40%) and Global Macro (40%)
• EMEA : Long/Short Equity- Fundamental (57%), Global Macro (52%) and Event Driven (47%)
By comparison, in the annual CS global investor survey at the start of the year, the top three strategies were Long/Short Equity, Emerging Markets Equity and Event Driven.
When evaluated on a gross basis (straight percentage increasing allocation), respondents believed that Long/Short Equity- Fundamental strategies are likely to see the most gross allocation activity in the second half of this year, with 61% of global investors surveyed indicating that they plan to allocate, followed by Event Driven, with 51% planning to allocate. Conversely, investors indicated that Commodities funds are likely to see the most redemption activity over the next six months, with 32% indicating that they plan to lower their allocation to the strategy, followed by Emerging Markets Credit, with 29% planning to reduce their allocation.
“From this mid-year survey, it is clear that investors remain focused on long/short equity and event-driven strategies, particularly those involving fundamental approaches,” said Robert Leonard, Managing Director and Global Head of Capital Services at Credit Suisse. “We believe that some of this activity is being driven by the gradual rotation of capital from fixed-income markets into equities,” Leonard said. “Investors are also reacting to improving global markets and lower correlations by seeking those funds that can differentiate by their stock-picking abilities. Based upon these responses, we would expect continued strong inflows to the industry during the second half of this year, as additional capital continues to come off the sidelines and into hedge funds.”