Preqin’s latest survey of more than 100 hedge fund managers, conducted in June 2014, reveals that 73% of respondents indicated competition in fundraising had increased in the past 12 months.
However, 64% of fund managers that run pooled products noted that their assets in these products had increased in the first half of the year. Similarly, 61% and 50% of firms that manage alternative UCITS and alternative mutual fund products respectively reported net inflows to these vehicles.
Other Key Findings Include:
Inflows Exceeded Outflows Across All Products
- Only 12% of managers of pooled hedge funds noted their assets in these funds had decreased in H1 2014, and 10% of alternative mutual fund managers reported the same. No managers reported outflows from their UCITS products.
- 37% of fund managers believe that the proliferation of liquid alternative funds will increase inflows to all products, as these attract more investors to hedge fund strategies.
Private Sources of Capital Outweigh Institutional Inflows in H1 2014
- 59% of fund managers with backing from high-net-worth individuals reported they had seen inflows from these investors in the first half of 2014.
- As a result of large inflows from private sources, institutional capital now represents 63% of all hedge fund assets. This is a decrease from 65% as of the end of 2013.
New Inflows from Retail Clients Continue
- 43% of fund managers have some capital from retail clients, and 47% of these reported increased amounts of capital from this source in H1 2014.
- 36% of respondents stated that there would be a significant increase in the amount of capital from retail clients in the next three years, while 46% believe there will be an increase but it will be small.
Amy Bensted, head of hedge fund products, said: "Although the first half of the year has been rocky, with performance proving underwhelming and investor satisfaction with the industry starting to wane, it has nevertheless been a successful one for many managers.
"Across all types of hedge fund products offered by the managers which participated in Preqin’s most recent study, more firms reported that they had seen asset inflows than had seen outflows. The industry now stands at $2.9tn in assets under management as of 31 July 2014, up from $2.66tn in assets at the end of 2013.
"Interest from a wider group of investors, particularly those in the private wealth arena and retail clients, is leading to a proliferation of new structures, in particular liquid alternatives, to cater to new markets. This is providing more product options to all hedge fund investors and has been a notable driver in the growth in assets in the hedge fund sector.
"Looking forward to the end of 2014, 77% of the hedge fund managers that participated in our June study stated that they believe industry assets under management will grow further in the second half of the year."