Around three-quarters (74%) of institutional investors are satisfied with the performance of their hedge fund portfolios in 2017, a significant rise from a year ago when only 30% of investors were satisfied with the same, according to the Tenth Annual Global Hedge Fund Investor Survey by Credit Suisse.
The study revealed an overall positive for the hedge fund industry, with investors predicting a 5.4% growth in assets under management in this year.
Investors were found to be more interested in equity-focused strategies in 2018, including emerging markets equity, fundamental equity long/short, quantitative market neutral and equity long/short sector funds.
The study also revealed a more wide range of fee structures being provided to investors, with 76% of investors cashing in on options including early stage discounts, new launches, and reduced fees for longer lock-ups.
Also, 63% of investors singled out risk management capabilities as the most important factor when making decisions on hedge fund allocations.
Investor interest was found to be highest for APAC, emerging markets, and EMEA, while net demand for North American markets was found to be relatively flat.
At the same time, investors also raised the target return expectations for their hedge fund portfolios to 8.53% in 2018 from 7.25% in 2017.
Credit Suisse managing director and global head of capital services Robert Leonard said: “Last year hedge funds had strong performance and also continued to improve the alignment of interests between themselves and their investors.
“Accordingly, as we begin 2018, the vast majority of institutional investors appear pleased with the contributions from their hedge fund portfolios. In fact, the number of investors who indicated that their hedge fund allocations met or exceeded their expectations more than doubled from last year, which is a very positive development for the industry.”