Preqin conducted its annual hedge fund manager survey by sitting down last November for a series of interviews with more than 100 fund managers and inquiring about their outlook for 2014. Hedge fund managers were asked to give their opinion on a variety of topics, including their experiences in changing assets under management in 2013, future hedge fund industry growth, and the most significant challenges facing fund managers today.
Assets under management
The results of the 2014 Preqin survey are even more optimistic than the results of the 2013 survey:
“At the end of 2012, 62% of fund managers predicted that hedge fund assets under management would increase over the course of 2013. These fund managers were proved right, with the industry adding approximately $255bn over the course of 2013. The managers that participated in the latest study in 2013 are even more positive about the outlook for growth in 2014; 83% feel the industry will grow as a result of inflows and performance, and just 2% feel the industry will suffer net outflows.”
Increase in institutional assets
Hedge funds used to be perceived as “too risky” for most institutions to invest in. That is simply not the case any more, with nearly two-thirds of hedge fund industry assets coming from institutions. “Forty-one percent of fund managers have reported to Preqin that they have witnessed an increase in the proportion of assets coming from institutional pockets over the past year. In fact, the proportion of total industry capital coming from institutional investors is the highest it has ever been, at 65% of the total industry assets under management. Although more than half of fund managers surveyed reported they have not had any changes to the proportion of their capital coming from institutional investors, just 7% of fund managers reported a decline in the proportion of their assets coming from institutional investors.”
New hedge fund launches
More than a quarter of hedge fund managers surveyed stated they planned to launch a new hedge fund during 2014. Breaking new fund launches down by region, 30% of fund managers based in the Asia-Pacific region have plans for a new fund launch, with 24% of North America-based fund managers and 21% of Europe-based managers planning a launch.
The survey also highlighted how concerns about the the Alternative Investment Fund Managers Directive would reduce European fund launches over the next few quarters. “The Alternative Investment Fund Managers Directive (AIFMD) has had a negative impact on the number of fund launches within Europe, and with fewer fund managers in the region planning to launch funds in 2014 than in other regions, this trend looks set to continue over the year ahead, and we may see a reduced number of fund launches from the region until the full effects of the AIFMD become clear.”