Hedge Fund Industry AUM Continues To Surge

By ExpatBriefing.com Editorial 21 February, 2014

The hedge fund industry is predicted to reach a record USD3 trillion of assets under management (AUM) by the end of 2014, up from USD2.6 trillion at the end of 2013, according to Deutsche Bank's 12th annual Alternative Investor Survey, released on February 18, 2014.

The figure is based on investors' predictions that the industry will see inflows of USD171bn, and performance-related gains of 7.3 percent, worth USD191bn.

2013 saw performance-related gains of 9.3 percent. Of the 400 respondents to the survey, 80 percent said that their investments' performance was as expected or better than expected during 2013. 63 percent of respondents are targeting returns of less than 10 percent in 2014.

Anita Nemes, Global Head of the Hedge Fund Capital Group at Deutsche Bank, said: "With the majority of investors happy with hedge fund performance, we expect institutional investors to further strengthen their commitment to hedge funds. Last year's respondents targeted 9.2 percent for their hedge fund portfolios, and hedge funds delivered – the weighted average return for respondents' hedge fund portfolios this year was 9.3 percent. Looking forward, respondents are targeting 9.4 percent for 2014."

The survey found that 39 percent of investors are now embracing a risk-based approach to asset allocation, up from 25 percent in 2013. 41 percent of pension consultants recommend this approach to clients.

Deutsche Bank explained: "The risk-based approach effectively removes historical constraints on the percentage allocation to absolute return strategies, allowing equity long/short managers to compete with long only and fixed-income absolute return funds within the overall fixed income risk budget."

Tags: Finance | Investment | Business | Pensions | Insurance | Hedge Funds | Budget | Expats | Invest |


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