NEW YORK, Feb. 28, 2017 /PRNewswire/ -- Credit
Suisse today releases its ninth annual Hedge Fund Investor Survey
entitled "Shifting Tides," in which responses from over 320
institutional investors representing $1.3
trillion of hedge fund investments, were analyzed on a
number of topics including:
- Key industry trends and forecasts
- Growth and return prospects for the industry
- Strategy preference and allocations plans
Key highlights from the 2017 Credit Suisse Annual Hedge Fund
Investor Survey:
- Overall sentiment was positive for hedge fund industry growth
with investors forecasting a 3.5% increase in new inflows
during 2017. This occurring as the industry begins the year at an
all-time high for assets under management of $3.018T.
- Investors appear to be making real headway in the push for
better alignment of terms, with 61% of respondents
reporting that they had at least one manager in their portfolio
with a hurdle rate, while 57% said their management fees
were lowered in the past 12 months.
- Global Macro-Discretionary was specified by investors as
the most preferred strategy for 2017 with 26% net demand. Fixed
Income Arbitrage/Relative Value, with 18% net demand, was
ranked as the second most in demand strategy by investors.
Emerging Markets-Equity rounded out the top three, also with
18% net demand.
Robert Leonard, Managing Director
and Global Head of Capital Services at Credit Suisse, said:
"Institutional investors remain strongly committed to hedge
funds playing a role in their portfolios. However, they also appear
to be following through and making real changes to their hedge fund
allocations. This includes increased concentration with funds in
their portfolios, adding strategies that are less correlated with
equities and terms/structures that better align their long-term
interests with those of their managers."
"Importantly, after years of discussion, it appears that there
is now real progress being made by institutional investors and
hedge fund managers in finding an equitable middle ground. While
still an ongoing dialogue, it is nevertheless encouraging and a
positive sign for the hedge fund industry going forward."
Other findings from the Survey included:
- Sector Funds: Investors reflected a pivot from broad
based Equity strategies towards sector focused ones. Top Equity
Sector strategies include Healthcare (#5) with 16% net demand,
Financials (#7) with 15% net demand and TMT (#12) with 10% net
demand. Net demand for Equity Long/Short Fundamental
declined, falling from #5 last year to #13 this
year.
- Quantitative/Systematic: Other strategies identified by
investors for potential allocations in 2017 include systematic
strategies like Equity Market Neutral – Quantitative (#4) with 17%
net demand and Global Macro – Systematic (#6) with 15% net demand.
This is a continuation of the trend from last year's survey
highlighting increased investor interest in quantitative
strategies.
- Ongoing commitment: 87% of investors indicated that
they would maintain or increase their hedge fund exposures in the
coming year. This is identical to last year, when 87% of investors
also indicated that they would be maintaining/increasing their
hedge fund allocations.
- Target Returns: only 30% of investors said that their
hedge fund portfolios had met or exceeded their expectations this
year, down from 45% last year. Looking forward, investors shared
that they were targeting annual returns of 7.2% for their hedge
fund portfolios in 2017, above the industry average returns of 5.5%
last year.
- New launches: There remains significant appetite for
start-up funds, with slightly less than half (44%) of respondents
reporting investing in a start-up fund last year. Of those who
allocated to a new launch last year, about 75% reported receiving
discounted or founders' share class terms.
- Key Factors in Selecting Hedge Funds: The top three
factors indicated for selecting hedge funds in an institutional
portfolio were returns after fees, non-correlation with other
investments, pedigree of risk takers and core team stability.
Investors also considered risk management skills to be a very
important factor in manager selection as well.
- Drivers of Redemptions: As in years past, mostly
idiosyncratic factors drove redemptions – 80% of investors
redeeming cited individual manager underperformance, while another
52% cited changes at manager (whether style drift or
investment professional turnover, among others).
- Significant Developments in 2017: When asked about
potentially significant developments that might occur this year,
investors mentioned additional fund closures, more fee compression,
better alignment of terms and a decrease in the amount of financial
regulations impacting hedge funds.
The survey, produced by Credit Suisse's Hedge Fund Capital
Services Group, is one of the most comprehensive in the industry
—focused on pension funds, endowments, foundations, consultants,
private banks, family offices and funds of hedge funds—and with
respondents diversified across all regions.
For a copy of the complete survey, please click here.
Credit Suisse AG
Credit Suisse AG is one of the
world's leading financial services providers and is part of the
Credit Suisse group of companies (referred to here as 'Credit
Suisse'). As an integrated bank, Credit Suisse offers clients its
combined expertise in the areas of private banking, investment
banking and asset management. Credit Suisse provides advisory
services, comprehensive solutions and innovative products to
companies, institutional clients and high-net-worth private clients
globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in
Zurich and operates in over 50
countries worldwide. The group employs approximately 47,170 people.
The registered shares (CSGN) of Credit Suisse's parent company,
Credit Suisse Group AG, are listed in Switzerland and, in the form of American
Depositary Shares (CS), in New
York. Further information about Credit Suisse can be found
at www.credit-suisse.com.
Credit Suisse Prime Services
Credit Suisse Prime
Services delivers outstanding core financing and operating services
that hedge fund and institutional clients require, including
start-up services, product access, high-touch client service,
financing, access to sources of capital, risk management, and
managed lending. Prime Services delivers the strengths of Credit
Suisse's investment banking, private banking and asset management
business to a focused number of clients. As a partner, Prime
Services is committed to bridging the gap between idea and
execution and ultimately functioning as the provider of choice for
both the alternative and traditional investment communities. Credit
Suisse Capital Services is part of Credit Suisse Prime Services and
is responsible for introducing hedge fund managers to a broad range
of institutional investors (including Funds of Hedge Funds, Family
Offices, Private Banks, Endowments and Foundations, and Public and
Corporate Pensions) who are seeking to allocate capital to Hedge
Funds.
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SOURCE Credit Suisse