Institutional investors predict hedge fund industry assets under management will exceed $3 trillion for the first time in history in 2015, Credit Suisse's annual hedge fund investor survey said.
The 378 institutional investors representing $1.13 trillion of hedge fund investments predicted total global hedge fund industry AUM will increase by 14.4% in 2015, an increase from the 2014 forecast by survey respondents of 12%.
“Institutional investors appear more optimistic regarding their plans to allocate to hedge funds than they were this time last year,” said Robert Leonard, managing director and global head of capital services at Credit Suisse, in a news release regarding the survey, “primarily because of their ability to generate uncorrelated returns and lower volatility in a broader investment portfolio.”
The most in-demand strategy ranked by respondents for 2015 is global macro, with a 32% net demand, as a result of market volatility.
“Investors have once again begun to look at strategies such as global macro and CTAs as well as energy/commodities,” Mr. Leonard said. “These are in addition to other previously favored strategies, such as event-driven and equity long/short.”
Event-driven strategies were the second most favored, with 26% net demand, with CTA/managed futures funds following with a 24% net demand. The latter strategy actually ranked last in 2014 with a net demand of -10%. Commodities and natural resources-related funds also saw an increase in demand to an 11% net demand, up from a -7% net demand the previous year.
For 2015, the least sought-after strategy is credit-leveraged loans/high yield, with a net demand of -7%, followed by convertible bond arbitrage at -3% net demand and convertible bond long-only at -1%.
Developed markets in Europe saw a 29% net demand from investors in terms of regional preferences, the highest among regions despite dropping from a 43% net demand the previous year. Global strategies and the Asia-Pacific region saw 28% net demand each, followed by North America at 22% net demand, which itself was an increase from a 15% net demand the previous year.