NEW YORK, March 3, 2016 /PRNewswire/ -- Credit Suisse today releases its eighth annual Hedge Fund Investor Survey, entitled "Staying the Course", in which responses from 369 institutional investors, representing $1.1 trillion of hedge fund investments, were analyzed on a number of topics including:
- Key Industry Trends and Forecasts
- Growth and return prospects for the industry
- Strategy preference and allocations plans
Key highlights from the 2016 Credit Suisse Annual Hedge Fund Investor Survey:
- Sentiment overall was positive for hedge fund industry growth with investors forecasting a 3.5% increase in hedge fund industry AuM during 2016. If accurate, this projection would push industry assets over $3 trillion with an upper quartile forecast for $3.2 trillion by year end.
- 87% of investors indicated that they would maintain or increase their hedge fund allocations in the coming year. Within that universe, insurance companies identified themselves as being most underweight hedge funds (compared to institutional peers), which could allow for further growth.
- Equity Market Neutral-Fundamental was forecast by investors to be the most preferred strategy for 2016 with 34% net demand. This represents a move up from the #5 ranked strategy in our 2015 survey. Equity Market Neutral-Quantitative was the second most preferred strategy with 30% net demand (also improving from last year when it was ranked 7th).
Robert Leonard, Managing Director and Global Head of Capital Services at Credit Suisse, said:
"Institutional investors remain committed to their hedge fund allocations and are optimistic for further growth in the industry during the upcoming year. This year's survey provides some interesting insights into how institutional investors are considering positioning their hedge fund portfolios for the possibility of continued volatility in global markets."
"Increased interest in strategies such as equity market neutral, global macro and equity long/short trading-oriented appears to indicate that investors are anticipating another challenging environment for 2016. Key factors noted in making new allocations were net returns, pedigree of investment team and lack of correlation with other investments."
Other findings from the Survey included:
- Global Macro-Discretionary (net demand 29%) was the 3rd highest preferred strategy according to investor responses, falling slightly from the top spot last year, but remaining a key area of focus for allocators.
- Investors also ranked Equity Long/Short-Trading (net demand 21%) and Equity Long/Short–Fundamental & General (net demand 18% each) in the top 5. The increase in interest for Equity Long/Short-Trading was significant; it moved up from last year where it was ranked 15th.
- Sector Funds: Appetite for TMT strategies (net demand 11%) moved up to the top ranked sector, while Healthcare (7% net demand), which was last year's top ranked sector, fell to the second spot. Interest in Financials sector (net demand 6%) also increased in this year's survey.
- Regional preferences: Interest for Developed Europe (36% net demand) had the largest increase over last year and remained in the top spot. Asia Pacific (28% net demand) and Global strategies (26% net demand) followed behind with Japan focused strategies (17% net demand) next in line.
- Key Factors in Selecting Hedge Funds: The top three factors indicated when selecting hedge funds for an institutional portfolio are returns after fees, pedigree of risk takers & core team stability and non-correlation with other investments. Other factors include degree of transparency and ability to lower volatility in the overall portfolio.
- Drivers of Redemptions: Only 2% of investors highlighted a lower target weight of hedge funds in their portfolio as the key driver of their redemptions last year. Almost half of respondents highlighted individual manager underperformance as the key reason for the redemptions they made in 2015 with 25% indicating a top down shift in strategy preference as their main factor.
- Significant Developments: When asked to opine on potentially significant developments that could occur in 2016, investors listed renewed focus on short-selling skills, potential for asset/liability mismatches, fee compression, additional fund closures and increased competition from alternative structures (such as UCITS, Liquid Alternatives and Co-Investment funds).
The survey, produced by Credit Suisse's Hedge Fund Capital Services Group, is one of the most comprehensive in the industry—focused on pension funds, endowments, foundations, consultants, family offices and funds of hedge funds—and with respondents diversified across all regions.
For a copy of the complete survey, please reach out to the press contacts below.
Sofia Rehman, telephone +44 (0)20 7883 7373, [email protected]
Yukmin Hui, telephone: +852 2101 6041, [email protected]
Credit Suisse AG
Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse offers clients its combined expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private clients globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over 50 countries worldwide. The group employs approximately 48, 200 people. The registered shares (CSGN) of Credit Suisse's parent company, Credit Suisse Group AG, are listed in Switzerland and, in the form of American Depositary Shares (CS), in New York. Further information about Credit Suisse can be found at www.credit-suisse.com.
Credit Suisse Prime Services
Credit Suisse Prime Services delivers outstanding core financing and operating services that hedge fund and institutional clients require, including start-up services, product access, high-touch client service, financing, access to sources of capital, risk management, and managed lending. Prime Services delivers the strengths of Credit Suisse's investment banking, private banking and asset management business to a focused number of clients. As a partner, Prime Services is committed to bridging the gap between idea and execution and ultimately functioning as the provider of choice for both the alternative and traditional investment communities. Credit Suisse Capital Services is part of Credit Suisse Prime Services and is responsible for introducing hedge fund managers to a broad range of institutional investors (including Funds of Hedge Funds, Family Offices, Private Banks, Endowments and Foundations, and Public and Corporate Pensions) who are seeking to allocate capital to Hedge Funds.
SOURCE Credit Suisse AG