Deutsche Bank Markets Prime Finance says Boston investors remain keen on hedge funds, Southern U.S. investors are keen on hedge fund-like mutual funds and Texas investors are active but at varying stages of hedge fund allocation.
The investor sentiment snapshot is found in the the latest DB Markets Prime Finance Hedge Fund Trends.
The team gauged investor sentiment in Boston based on attendance at the Global ARC Conference in that city where it found both institutional and individual investors citing diversification benefits and potential downside risk protection as key benefits to hedge fund investments.
Much as they appreciate hedge funds, however Boston investors were also keen on lower fees, greater alignment of interests between limited partners and managers, and gates/lock-up provisions which protect investor interests.
As for the Southeast, the research team met with several Miami-based family offices and funds of funds and found the latter “very focused on leveraging their research capabilities to reach retail investors by launching mutual funds.” These investors are looking for hedge funds who are interested in acting as sub-advisors for these 40-Act products.
The family offices, on the other hand, were primarily interested in event-driven managers followed by more directional equity long/short managers. There was less interest in CTA and quant managers.
In Dallas and Austin, the team met “a handful” of investors including two endowments and a fund of fund. All were active in the hedge fund space, but at varying stages—one was in the process of rebalancing their portfolio to group assets according to risk buckets, while another was in the process of launching a liquid alternatives product and the third was actively deploying capital as assets were being returned from their private equity investments.