Hedge-Fund Investors Aren't Expecting a Performance Bump in 2018

Hedge Funds Try to Drop the Name, but Keep the Fees

Investors are returning to hedge funds amid hopes that the recent jump in volatility and pending interest-rate hikes in the U.S. will provide a fertile hunting ground for the money pools.

It could be a turning point for an underperforming industry that was held back for years by central-bank money printing. Yet investors including family offices, endowments, foundations and pension funds are keeping their expectations for 2018 muted and targeting 8.2 percent returns -- in line with last year.

Moderate Expectations

Investors keep 2018 hedge fund return targets muted despite spiking volatility

Source: Deutsche Bank

Survey includes family offices, endowments, foundations, funds of funds, private banks, pension funds and insurance companies

Other points from Deutsche Bank’s 2018 Alternative Investment Survey:

  • Event-driven funds will continue to see increased demand after receiving $6.9 billion of inflows in the fourth quarter of last year
  • Western Europe is now the most sought-after region, with 37 percent of investors planning to add exposure there, versus 17 percent in the 2017 survey
  • One in five investors plans to increase allocations to long-short funds
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