Majority of fund managers do not expect their performance or investment decisions to be impacted by Brexit, but hedge fund managers anticipate being able to benefit in the short term as they capitalise on market volatility, a survey by Preqin has revealed.
Preqin surveyed more than 140 alternative assets firms and 50 institutional investors to gauge their reactions and expectations following the UK’s decision to leave to the European Union.
According to the survey report, 45% of private capital managers believe the Brexit decision will have no affect on their portfolio in the next 12 months, while 31% of hedge fund managers opined that the referendum results will have a positive impact.
Approximately 25% of all respondents remain uncertain of the implications, Preqin noted.
Fund managers were much more uncertain of the longer term impact of Brexit on their portfolios (stated by 38% of respondents), although 40% believe it will have no effect in the long term.
Hedge fund managers were more optimistic, with no respondents believing it will negatively affect their portfolio, and 23% believing that the longer-term impact will be positive. Private capital firms were more nuanced in their views on the long-term impact, with similar proportions believing the impact will be positive (9%) and negative (13%).
In the next 12 months, 19% of surveyed private capital fund managers expect their performance to be negatively impacted by Brexit, while 13% expect the impact to be positive. In the longer term, 9% expect Brexit to have a positive impact on performance, and 13% a negative impact, the report added.
Almost a third (32%) of fund managers said they will look to invest less in the UK over the next 12 months, while 3% said they anticipate investing more. In the longer term, 14% each expect to increase and decrease their UK investments.
Although 13% of hedge fund managers said that they thought it would be negative in the short term, 31% expected the impact of Brexit on performance to be positive. In the longer term, almost a quarter (23%) expect the impact to be positive, while no surveyed manager anticipated a negative impact.
The survey also found that 21% of fund managers will look to make more investments in the UK over the next 12 months, and 13% will make more UK investments in the longer term. Just 11% will slash their investments in the short term, and 8% will make fewer investments in the longer term.
Nearly one-third (30%) of private capital investors said they think the impact of Brexit on performance is negative, while 12% think it is positive. Hedge fund investors were more optimistic; 22% said they expect performance to be negatively impacted, but 35% expect it to be positive.
The study also revealed that less than 10% of investors in both private capital and hedge funds think they are likely to invest more in the UK in both the shorter and longer term. Almost half (43%) of private capital investors expect to invest less in the UK in the next 12 months, and 31% in the longer term. Among hedge fund investors, those figures stand at 31% and 24% respectively.
A quarter of private capital investors will also look to invest less in the EU over the next 12 months, while 6% think they are likely to invest more. Overall, though, 70% of alternative assets investors expect to maintain their EU investments in the short term, and three-quarters expect no change in the longer term.
In the next 12 months, 2% of investors will look to invest with more UK-based alternative assets firms, while 24% think they are likely to invest with fewer. The same proportion expect to invest with fewer UK-based managers in the longer term, but no surveyed investor anticipates increasing investment with UK managers as a result of Brexit, the report added.
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