Total hedge fund assets grew by more than $300 billion in 2013 to more than $2.6 trillion overall, according to a report from Preqin.
Forty-one percent of managers surveyed reported an increase in the proportion of assets coming from institutional investors while 7% reported a decrease. All types of major institutional investors increased their average allocation to hedge funds during 2013. Institutional investors now make up more than 65% of total inflows into hedge funds, the highest proportion ever, according to Preqin.
Hedge fund managers are optimistic about 2014 as well — 73% have a positive outlook for the industry, and 83% expect total assets to increase. More than 100 hedge managers were surveyed.
In a separate Preqin report, 71% of unlisted infrastructure managers worldwide expect to deploy more capital in 2014 than in 2013. Fund managers have a record $98 billion in dry powder, or unspent but committed capital.
Seventy-seven percent of respondents see more competition for assets than last year and 29% said transaction sizes will increase because of market conditions driving up prices. Only 3% said deal sizes will decrease. The average deal size in both 2012 and 2013 was $438 million, the highest amount since 2007.
There were 689 infrastructure deals completed last year with an aggregate value of $302 billion, relatively flat from the year before. Forty-four percent of the deals were made in European assets and 32% in North America-based assets.
Fund managers said energy is the most attractive sector this year, followed by transport and renewable energy.