Hedge fund managers are confident that returns will remain steady or increase in 2005, according to a survey of attendees of the GAIM USA industry conference in January. Rocaton Investment Advisors, which conducted the survey, found that 80% of managers were optimistic about hedge fund returns, and 10% predicted returns over 10% in 2005. Despite the sunny outlook, 57% of those surveyed said "performance mediocrity" is the biggest challenge to the hedge fund industry.
More than half (57%) of conference attendees said they expect hedge fund fees to decrease in the next 12 months. Most of those surveyed (89%) expected flows into hedge funds to increase, although 35% rate the amount of information available about hedge funds as only "adequate."
Forty-eight percent of respondents said hedge funds of funds are the best way for new investors to enter the asset class, while 17% recommended direct investment. David Katz, founding partner of Rocaton, said in a statement that nearly 32% of survey respondents view hedge funds as a separate asset class, 13% view them as part of a portable alpha strategy and 12% regard hedge funds as equity substitutes.