Large Hedge Fund Investor Plans

July 14, 2011 James Heinsman Hedge Fund News

According to a study from the Preqin Hedge Fund, it seems that within the next year, close to a third of investors are planning to invest up to a combined staggering $195bn.  Out of these, nearly half are looking for ways of investing in “funds of hedge funds,” as reported in Hedgeweek.  As well, more than half of this group is looking for their own new investments.

Public Pension Funds

Other intentions for the next year are for around 36 percent of public pension funds to “make extra allocations to the asset class in the next 12 months.”  Around half of these want to make “fund of funds commitments.”  Out of the private sector pension funds that want to escalate their hedge fund allocations over the next year, approximately 67 percent are seeking ways of investing in “funds of hedge funds.”  From that figure, about 50 percent with investment plans want to make the investment with North America-based managers.

European Investors

When we look at the world of Europe we find that these investors are really into making new commitments.  Figures from Hedgeweek show that 45 percent are looking for new opportunities.  That’s a pretty large figure in and of itself.  But if you compare it to the figure for North American based investors, you can really tell how big it is as that region only had 29 percent seeking the same and with Asia and the rest of the world, it was just 32 percent.

With the investors, 87 percent are looking to invest in short/long equity “as a strategic preference,” with 58 percent “taking an opportunistic approach.”  As well, 83 percent “anticipate including an allocation to one or more single-manager funds.”

Conclusion

According to the main reporter of the Preqin research, Katherine Johnson, “with nearly a third of the investors on the Preqin database having fixed plans for new investments in the next 12 months, and many others investing opportunistically or considering new allocations, the future is looking bright for the industry.  Investors could invest up to USD195 billion in the next 12 months, with up to 2,000 funds currently being sought. Funds of hedge funds, pension funds, insurance companies and a large number of other investor groups are looking to increase their hedge fund portfolios in the next year. These investors are seeking a wide range of strategies and structures and therefore it is vital that managers have the best intelligence on these investors if they are to gain a slice of this capital.”

Hedge Funds, Katherin Johnson, Pension Funds, Preqin,

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