Big new inflows and strong performance could produce a hedge fund industry larger than ever this year, according to a new survey.
Deutsche Bank's annual poll of institutional investors suggests that total assets under management in hedge funds could rise 10% in 2011 to $2.25 trillion. According to Hedge Fund Research, total industry AUM stood at $1.917 trillion at the end of last year, just short of the record $1.93 trillion hedge funds managed in the middle of 2008.
While the investors polled are clearly counting on more strong returns from hedge funds, they also plan to do their part in boosting hedge fund assets. The Alternative Investment Survey, in its ninth edition, predicts inflows four times larger than last year, with $210 billion in new money pouring into hedge funds.
"In 2010, a lot of investors still had to deal with side-pocketed, gated and suspended investments," Anita Nemes, global head of capital introduction at Deutsche Bank, said. "The situation this year is more favorable."
Of the biggest investors, the overwhelming majority of sovereign wealth funds and pension funds plan to boost their hedge fund teams this year, the survey showed, with 83% of the former and 72% of the latter saying they'll do so. The survey also showed investors ready to cut back on their large cash balances, which hedge funds should benefit from.