Institutional Investors to Increase Exposure to Hedge Fund Managers in 2016, Finds Context Summits Survey

96% of investors surveyed plan to invest in two or more funds in 2016

Possible geopolitical crises or equity market collapse cited by investors as greatest tail risk

17 Feb, 2016, 11:00 ET from Context Summits

MIAMI, Feb. 17, 2016 /PRNewswire/ -- A strong majority of institutional investors (79 percent) plan to increase allocations to hedge fund managers in 2016, according to a survey of approximately 200 investors at Context Summits Miami 2016. Ninety-six percent of investors plan to allocate in two or more funds in 2016. In total, nearly 500 investors and 450 managers representing over $1.5 trillion in combined assets attended the three-day conference, which connects private fund managers with qualified investors via one-on-one meetings.

"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 Chief Executive Officer 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." 

More than a quarter (26 percent) of investors said they planned to maintain all of their current hedge fund allocations, and two-thirds (66 percent) planned to redeem from two funds or less. The majority of investors (62 percent) also said that they would reduce their cash position by the end of the year.

Additional findings from the survey include:

  • Commodities as the most bullish sector: 40 percent of investors picked commodities, followed by alternative lending (20 percent), technology (11 percent) and credit/fixed income (9%), as the market sector offering the greatest potential for 2016.
  • Investors split on the biggest tail risk: Investors identified geopolitical crises (33 percent) as the greatest tail risk to their portfolio, followed by a possible equity market collapse (31 percent) and a prolonged China slowdown (24 percent). Relatively less impactful risks included emerging markets crises (8 percent) and inflation (6 percent).
  • Minimal Fed rate hikes expected: A third of investors (33 percent) do not expect additional rate hikes in 2016, while nearly two-thirds (63 percent) expect just one or two increases in the current year. However, 70 percent of investors said that a rate hike would have no impact on their hedge fund allocations.
  • Bigger not necessarily better: 70 percent of investors said fund performance was an important factor in the investment process, while only 37 percent of investors 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.

Context Summits hosts four events each year. The next event is Context Summits Texas 2016, which will be held from June 5-7 at AT&T Stadium in Arlington, Texas. For additional information, please visit www.contextsummits.com/texas.

About Context Summits:

As the preeminent producer of events for the alternative asset management industry, Context Summits focuses on elevating the conference experience through an innovative format and structure where relationship building leads to unmatched results. A pioneer of the one-on-one 'summit' format, Context Summits utilizes an innovative approach to deliver effective and transparent networking events that elevate the conference experience for managers, allocators and investors. Through its systematic approach, Context Summits is able to attract high quality attendees, making meetings efficient and productive. For more details, please visit: http://www.contextsummits.com.

SOURCE Context Summits