Context Summits Survey Shows Most Investors Plan Increased Hedge Fund Allocations

Feb 17 2016 | 8:52pm ET

A strong majority of institutional investors plan to increase allocations to hedge fund managers in 2016, according to a new survey by Context Summits of approximately 200 investors at a recent conference, which brought 500 investors and 450 managers representing over $1.5 trillion in cumulative assets under management together for a three-day event. 

79% of respondents plan to increase hedge fund allocations this year, while a full 96% plan to allocate in two or more funds in 2016, revealed the survey. 26% plan to maintain all of their current hedge fund allocations, and two-thirds plan to redeem from two funds or less.

The majority of investors (62%) also said that they would reduce their cash position by the end of the year. 

“This survey provides invaluable insight into allocation trends for 2016 and offers a snapshot of the conversations between managers and allocators at our Summit,” said Mark Salameh, co-founder and CEO of Context Summits. “We believe this year presents a unique opportunity for many managers to distinguish their story and attract institutional capital, particularly considering findings in this survey coupled with the current macro environment and broad range of strategies represented at our Summits.” 

Other findings from the survey:

  • 40% of investors picked commodities as the market sector offering the greatest potential for 2016, followed by alternative lending (20%), technology (11%) and credit/fixed income (9%).
  • Investors identified geopolitical crises (33%) as the greatest tail risk to their portfolio, followed by a possible equity market collapse (31%) and a prolonged China slowdown (24%). Relatively less impactful risks included emerging markets crises (8%) and inflation (6%).
  • 33% of investors do not expect additional rate hikes in 2016, while nearly two-thirds expect just one or two increases in the current year. 
  • 70% of investors said that a rate hike would have no impact on their hedge fund allocations.
  • Bigger is not necessarily better: 70% of investors said fund performance was an important factor in the investment process, while only 37% thought the fund’s asset size was a key determining factor.

Context Summits will publish a detailed report with the complete survey results and in-depth analysis next month, which will be available at www.contextsummits.com.

Founded by Salameh and Ron Biscardi in 2013, Context Summits hosts a series of alternative investment industry events each year. The company’s conferences utilize an innovative format and structure focused on relationship and one-on-one interaction.


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