„Despite a series of setbacks and scares in 2006, survey respondents feel the hedge fund industry will continue to grow modestly in 2007,” said John Dyment, Global Head of the Hedge Fund Capital Group at Deutsche Bank. „Investors indicated that they are keeping the market and industry events of 2006 in perspective and using risk management as key factor in selecting hedge fund managers.”
Highlights of Deutsche Bank’s Fifth Annual Alternative Investment Survey
• Investors rank the best performing investment strategies for 2007 – 18% rank long/short equity as the top performing strategy, 13% rank macro and 12% rank event-driven/relative value strategies as top performers.
• Some strategies will see a dramatic growth of assets, such as merger arbitrage, which is predicted to have a 20% increase in assets based on portfolio rebalancing. Others, such as credit arbitrage, will see outflows of as much as 13% of current assets.
• According to investors, hedge funds that invest in China are going to see a huge jump in assets; Deutsche Bank predicts inflows of more than 38% of current investment levels to these funds.
• Emerging Asia is predicted to be the top performing region for the second year in a row. Pensions, government organizations, endowments and foundations are particularly interested in this region, with more than half of these respondents indicating that they will increase their exposure to the region.
• During 2006, the number of investors willing to accept longer lock-ups surged. More than half are willing to accept a lock-up of two years or more, a figure that has more than doubled since 2005.
• Investors are not enthusiastic about hedge funds adding private equity components to their traditional hedge fund offerings; 39% of investors feel that it is a bad idea for hedge funds to make private equity investments.
• Half of the survey respondents are open to switching from traditional private limited partnership investments to investments in publicly traded shares sold by hedge funds.