Hedge fund managers expect to capitalize on the market volatility and opportunities in the wake of the U.K.'s vote to exit the European Union, found alternatives research firm Preqin.
Preqin surveyed 75 private capital money managers and 67 hedge fund managers between June 30-July 4, following the result of the U.K.'s June 23 referendum vote.
While 13% of hedge fund managers surveyed said they thought the result would be negative in the short term, 31% expected a positive impact on performance. Over the longer term, the expectation of a positive impact fell to 23%, and no manager expected to see a negative impact.
Of private capital managers — which comprises private equity, venture capital, real estate, infrastructure, private debt and natural resources managers — 19% predict a negative impact on performance and only 13% expect a positive impact. Over the longer term, 9% expect Brexit to be positive for performance and 13% expect a negative impact.
Views on the U.K. as an investment destination were also split. Almost a third — 32% — of private capital managers expect to invest less in the country over the next 12 months, and just 3% expect to invest more. Over the longer term, 14% each expect to increase and decrease U.K. exposure. Of hedge fund managers, however, 21% will look to increase allocation to the U.K. over the next year, and 11% will reduce their exposure over the short term. Longer term, 13% expect to make more U.K. investments and 8% expect to reduce exposure.
Just 2% of investors in private capital strategies and hedge funds will look to invest with more U.K.-based alternative asset management firms over the next 12 months, compared with 24% that expect to invest with fewer. For the longer term, 24% expect to invest with fewer U.K.-based managers and no investor anticipates increasing their investment with U.K. managers as a result of Brexit.
Further, only 7% of U.K.-based alternative money managers are considering moving operations outside the U.K. However, an additional 17% said they were uncertain at this stage.
The survey and more details are available on Preqin's website.