Credit Suisse Releases Survey Of Hedge Fund Investor Sentiment

Jul 11 2017 | 11:17pm ET

Realignment of interest continues apace within the hedge fund industry, according to Credit Suisse’s annual hedge fund investor sentiment survey, as hurdle rates and founder’s share structures become pervasive. Meanwhile, quantitative investing continues to capture the attention of the majority of institutional investors.

Credit Suisse’s survey polled more than 200 global institutional investors representing almost $660 billion in hedge fund investments, asking them about their hedge fund activities during the first half of the year as well as strategy appetite and allocation plans for the second half of the year.  

Key highlights from the survey included: 

  • Hurdle rates and founder's share class structures now present in more than 70% of institutional portfolios. This appears to be part of the ongoing dialogue between investors and hedge funds regarding proper alignment of terms & fees.
  • Quantitative investing was a focus for the majority of respondents, with nearly ~60% indicating they were likely to increase allocations to strategies incorporating some quantitative analysis over the next 3-5 years. This includes pensions, which registered the most interest of all investor segments. 
  • 81% of investors responded they are very likely / likely to allocate to hedge funds during the second half of 2017, which is up from 73% during the second half of last year. In particular, fund of funds (86%) and family offices (84%) said they were most likely to be active allocators.
  • Hedge funds saw the largest positive swing in net demand for any asset class surveyed this year, with investors reporting +12% net demand for hedge funds in their asset allocation models. This compares favorably with last year, when investors indicated -3% net demand for hedge fund allocations. 
  • The top three strategies for potential 2H 2017: Equity Long / Short, Global Macro – Discretionary, and Quantitative – Equity Market Neutral / Statistical Arbitrage. Interest in Fixed Income Arbitrage / Relative Value strategies saw a decline from the beginning of the year, falling out of the top five preferred strategies
  • .In addition to Global strategies (57%), investors indicated a regional focus on Developed Europe (47%), and North America (47%). 
  • India was the most frequently mentioned country specific opportunity.
  • 87% of investors who redeemed from hedge funds during the first half of this year expect to recycle that capital, up from 82% in 2016, to other hedge fund managers rather than to other asset classes. 
  • Interest in alternate vehicles increased from last year, with co-investments and risk premia being ranked as the most preferred. Interest in long-only funds managed by hedge funds also showed a slight increase as well.

Survey respondents included institutional investors on a global basis, CS said, including fund of funds, family offices, consultants, endowments & foundations, private banks, and pension funds; 60% of responses came from the Americas, while 22% were from EMEA based investors and 18% were from APAC.  

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...