Preqin: Majority of Alternative Asset Managers Optimistic About Election's Impact

Nov 17 2016 | 10:04pm ET

Alternative asset fund managers are broadly optimistic about the possible impacts of Trump’s presidency, according to a survey by industry data provider Preqin, but some concerns remain.

Preqin interviewed 182 alternative assets fund managers following Trump’s victory in order to gauge their perceptions on the immediate impacts, if any, on their portfolios and on their prospects for the next four years. 

The results indicate that, despite widespread concerns about a Trump presidency before the vote, fund managers now feel that the outcome will have a net positive effect for them and for the industry as a whole, Preqin said in a statement. 

Key highlights of Preqin’s election survey: 

  • More than half (53%) of fund managers believe the effect of the election will be positive for alternative assets in the U.S., while just 12% think it will be negative. In contrast, 25% think the industry outside America will be negatively affected, while 22% expect a beneficial effect. 
  • Among Trump’s policy pledges, 73% of fund managers surveyed believe reduction in corporate taxes will be the most beneficial, while 62% cite the proposed infrastructure spending put forth by the President-elect while on the campaign trail. 
  • On the flip side, the majority of surveyed managers believe that withdrawing from trade deals will be negative, while 55% believe that changes to the taxation of carried interest will adversely affect them. 
  • Hedge fund managers are a broadly optimistic group: 46% expect their U.S.-based assets to benefit in the next 12 months, and 35% expect the effect to last into the longer term. Similarly, 28% expect a boost for their non-U.S.-based holdings in the next 12 months, and 27% over the longer term. As a result, 53% of hedge fund managers expect their performance to benefit in the remainder of 2016, 46% over the next 12 months, and 35% in the longer term. Only around a tenth of managers expect performance to suffer at any stage.
  • For the most part, managers cited uncertainty over the effects of Trump’s policy proposals as a key consideration, Preqin said. However, while some managers suggested that potential impacts on debt rates and securing investor capital might be negative, others felt that market volatility might serve to benefit alternative investments, and reduce recent correlation in returns between the industry and more conventional financial markets.
  • The vast majority of alternative investment managers believe that fundraising activity will not be affected over Trump’s presidential term, most likely due to hedge funds’ ability to capture returns in varying market conditions and the inherent illiquidity of the space. An area where the largest proportion of managers believes there could be an effect is in the location (18%) and types (13%) of investors that are targeted, while the industry focus could be a factor due to uncertainty over specific policy decisions.

Preqin’s survey polled 125 private capital fund managers and 57 hedge fund managers active across private equity, private real estate, infrastructure, private debt and natural resources. 

Founded in 2003, Preqin is a leading source of information for the alternative assets industry, providing data and analysis via online databases, publications and bespoke data requests. More than 40,000 professionals in 90 nations use the company’s products. 

In Depth

PAAMCO: Will Inflation Deflate the Asset Bubble?

Jan 30 2018 | 9:49pm ET

As the U.S. shifts from monetary stimulus to fiscal stimulus, market pricing should...


CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Boost Hedge Fund Marketing ROI By Raising Your ROO

Feb 14 2018 | 9:57pm ET

Tasked with delivering returns on client capital, a common dilemma for many alternative...


FINalternatives Trending

From the current issue of