High-Net-Worth Investors Send HF Assets To $2.9T

Aug 28 2014 | 1:11pm ET

The majority of hedge fund managers polled by Preqin saw their assets increase in H1 2014, thanks in part to allocations from high-net-worth individuals, as industry assets hit $2.9 trillion.

A full 64% of the 100 hedge fund managers polled by the hedge fund data provider in June said their assets under management had increased in the first half of 2014, this although 74% reported increasing competition in fundraising over the past 12 months.

Moreover, 59% of fund managers reported receiving backing from high-net-worth investors in H1 2014.

As a result of large inflows from private sources, institutional capital now represents 63% of all hedge fund assets—down from 65% as of the end of 2013.

Managers of alternative UCITS and mutual fund products also did well in H1, with 61% of the former and 50% of the latter reporting net asset inflows.

Only 12% of managers of pooled hedge funds reported a decline in assets in the first half, as did 10% of alternative mutual fund managers. No managers reported outflows from their UCITS products.

The survey also found that 37% of fund managers believe the proliferation of liquid alternative funds will increase inflows to all products.

“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 $2.9 trillion in assets under management as of 31 July 2014, up from $2.66 trillion in assets at the end of 2013,” said Preqin's Amy Bensted in a statement.

“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.”

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