Credit Suisse Releases Annual Hedge Fund Investor Survey
NEW YORK, March 7, 2013
NEW YORK, March 7, 2013 /PRNewswire/ -- Credit Suisse is pleased to announce
the results of its annual Global Hedge Fund Investor Survey, in which we
analyze responses from close to 550 institutional investors, representing
$1.03 trillion of hedge fund investments, on a number of topics. These include
investors' current views on the growth and return prospects for the hedge fund
industry; their preference and allocations plans across various strategies and
regions and their views on key new trends and developments in the industry.
This year's survey also explored in closer detail preferences and investing
trends amongst pensions and other institutional investors.
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The title of this year's survey, "Reaching New Heights", reflects optimism
expressed by institutional investors towards the prospects for industry
performance and growth during 2013. Robert Leonard, Managing Director and
Global Head of Capital Services at Credit Suisse commented: "Institutional
investors are clearly expressing more confidence in risk assets in this year's
survey and appear less worried about left tail risk events or macroeconomic
uncertainty. Given the backdrop of effective central bank policies, lower
political uncertainty and positive performance last year, it is not surprising
to see increased expectations for 2013."
When respondents were asked to forecast total industry assets at the end of
2013, the average prediction was US$2.42 trillion. This would represent an
industry growth rate of over 10% or $220B, comprising of positive performance
and new capital inflows. If correct, this would represent an all-time high for
hedge fund industry assets under management by the end of this year.
Respondents shared their insights into which hedge fund strategies they
anticipate allocating capital to during 2013:
oLong/Short Equity was identified as being the most sought after strategy
oEmerging Markets Equity was the second most favored strategy
oEvent-Driven strategies moved up to 3^rd place from 10^th place last year
In terms of regional preferences, Emerging Markets and Asia-Pacific regions
remained in the top two spots, though they traded places from last year's
survey. This seems in keeping with investors' stated increase in risk
appetite. Investors also exhibited a very strong bounce back (26%) in demand
for Developed Europe, as they appear to have taken comfort in some of the
political actions taken there in the latter half of 2012.
When asked about their preference for hedge funds from a size standpoint,
investors indicated that those managers running between $500M and $2B in
assets under management were in the best position to be considered for future
The survey also uncovered a number of other key new industry trends and
developments for 2013:
oReturn expectations among institutional investors for hedge funds
increased to 6.9% from returns expectations from a forecast of 5.4% last
year. This appears to coincide with the ongoing reduction in correlations
and the belief that this will create an environment for stock-picking
strategies to outperform.
oRespondents ranked crowded trades/herd behavior, additional regulatory
changes and underperformance risk as the three greatest sources of risks
facing the hedge fund industry this year. Sovereign default risk and
credit/counterparty risk, which were both in the top three last year,
oInvestors continue to show strong appetite for those new hedge funds
launches deemed to be of institutional quality. However, in a new
development, the survey results showed a large uptick in the number of
investors who would require some level of reduced fees, including
founder's share classes.
oA new section in this year's survey covered trends and developments in the
pension space. The results indicated that public pension funds were the
most active in this segment and expect to increase their allocations going
forward. Further, our findings identified risk-adjusted and uncorrelated
returns as the primary investment objectives of the pension community, and
also highlighted the continued significance of consultants.
oInvestors regard further hedge fund consolidations/liquidations this year
to be a potentially significant development. They also expect to see
additional fee compression this year, as well as the growth of alternate
structures such as 40 Act Funds and long-only vehicles from hedge fund
Mr. Leonard added: "We believe that pension funds represent a key element for
the future growth of the hedge fund industry and therefore, wanted to take a
deeper dive into the developing trends surrounding their investment
preferences and requirements. We believe that this year's survey provides
some truly unique insights into those trends."
The survey, produced by Credit Suisse's Hedge Fund Capital Services Group, is
the most comprehensive published to date, with more than 550 groups
participating—including pension funds, consultants, family offices and funds
of hedge funds—and with respondents diversified across all regions.
Not an offer or advice: The information expressed in this Media Release has
been prepared for general information and is not an expression of opinion or
recommendation by Credit Suisse or its any of its affiliates. It does not
constitute financial advice and should not be relied on as such. It does not
take into account an individual investor's objectives, financial situation and
needs which are necessary considerations before making any investment
decision. It should not be relied upon in making investment decisions or by
any other person for the purposes of investment advice.
Credit Suisse AG
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SOURCE Credit Suisse AG
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