Investors feel their private equity and hedge fund investments met their expectations in 2013 and are planning to allocate more to these asset classes in 2014, according to new research from Preqin.
The data provider examined the investment plans and views of more than 430 alternative asset investors, including public and private pensions, insurers, foundations, endowments, funds of funds and family offices.
The poll revealed 87% of investors were happy with their 2013 returns from private equity and 68% expect to commit as much if not more to p.e. funds in H1 2014. Moreover, 36% plan to up their private equity allocations over the next 12 months.
But investors are almost equally bullish about hedge funds: 84% believe their hedge fund returns met or exceeded expectations in 2013 and a whopping 92% expect to maintain or increase their allocations to the asset class over the next 12 months. When they do invest, 57% will target funds with $1 billion to $5 billion in assets under management. And when they redeem, the key factor for 78% will be performance issues.
A full 45% of investors feel p.e. is the asset class that will present the most opportunities over the next 12 months; 23% believe hedge funds hold more promise.
As for new industry regulations, 36% of investors felt new rules for hedge funds were positive, down from 49% in 2012. The bulk of investors (40%) was unsure about the value of new private equity regulations.
The top three investor concerns with regard to hedge funds were performance (30%), regulation (24%) and the economic environment (13%).
For private equity, it was the same concerns, different order: regulation (26%), economic environment (22%) and performance (22%).