Global hedge fund assets may return to the pre-financial crisis peak of almost $2 trillion by year end, boosted by investment profits and capital inflows, according to a Credit Suisse Group AG survey of investors.
Industry assets may grow 25% from the $1.6 trillion at the end of 2009, according to the annual survey published today. The Zurich-based lender polled about 600 institutional investors worldwide with about $1 trillion of hedge fund assets among them, or more than 60% of the industry total.
Asia-Pacific will likely be the biggest beneficiary among all geographies, with 61% of investors indicating they are increasing or considering raising their allocations to managers focused on the region, the survey said.
“The best hedge funds have demonstrated their ability to outperform both rising and falling markets,” said Benjamin Happ, Hong Kong-based Asia-Pacific head of capital services in Credit Suisse’s prime services division. “This is attracting an ever-greater allocation of assets from investors looking for stability and growth.”
Investors indicated they are most likely to add investments in macro and event-driven funds.
Hedge fund managers are trying to lure back investors with promises to increase disclosure and cut fees in exchange for longer lockups, the survey said. Ninety-four percent of the investors said they are receiving more information from managers, according to the latest survey.
Globally, the average number of hedge fund holdings of investors has fallen 17% since September 2008 to 48 today.
Worldwide, investors’ initial investment in a fund averages $18 million, with long-term holdings of $33 million, the survey found.