A surprisingly high percentage — 44% — of institutional investors invest in long-only strategies run by hedge fund managers, according to data released Monday by Deutsche Bank Markets Prime Finance.
That compares to 40% of investment consultants, 36% of private wealth managers and 28% of hedge funds of funds, according to Deutsche's “From Alternatives to Mainstream” hedge fund report.
About 50% of hedge fund managers surveyed said they offer “non-traditional hedge fund products” such as long-only strategies, UCITS funds and mutual funds. About 30% of hedge fund firms said they offered long-only strategies totaling $177 billion as of Oct. 31. About 17% of hedge fund managers offered hedge fund mutual funds totaling $238 billion at the end of the third quarter, while 13% offered hedge fund UCITS totaling €163 billion ($222 billion), the report said.
A majority of hedge fund companies — 67% — said demand from all client types was among the top three reasons for offering long-only investments.
Only 28% of all investors, on the other hand, said they asked a hedge fund manager to set up a long-only strategy for them, while 30% said they might in future.
Deutsche's November global survey received responses from 60 hedge fund managers and 200 investors, including pension funds, endowments, foundations, insurance companies and family offices.