Put Into Perspective – Ahead Of The Mainstream by Skenderbeg Alternative Investments
“If you want to have a better performance than the crowd, you must do things differently from the crowd.”
– John Templeton
Hedge fund investors based in Middle East emerge as large, sophisticated global investors
Middle East-based investors have become an important source of capital for the hedge fund industry in recent years, owing to the large re-sources available to them and their level of activity within the asset class. Here, we take a look at the different groups of Middle East-based investors active in hedge funds and their significance within the industry as a whole.
According to Preqin’s Hedge Fund Investor Profiles, large investors in the Middle East, such as banks, sovereign wealth funds and family of-fices, each make up the largest proportion (11% each) of investors allocating capital to hedge funds (as shown in the chart below) with many other investor types also investing in the asset class. Aside from banks, sovereign wealth funds and family offices, investment companies and wealth managers each represent 9% of Middle East-based hedge fund investors. On average, hedge fund investors in the Middle East have $77bn in assets under management, making them significant in terms of their sheer size and scale.
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Advisors staying the course on alternatives
The alternative investment industry seems to be in good standing with broker-dealer representatives and registered investment advisors, at least based on a recent survey from Pershing and Beacon Strategies, LLC. The survey polled 1,200 advisors about alternative investments and their use of them in client portfolios. From the perspective of the alternative investment industry, the findings have to be encouraging.
According to the survey, almost 75% of advisors surveyed use some form of alternative investments in client portfolios and 70% intend to maintain their current weightings for alternatives in 2015. On top of that, for the advisors using alternatives, 73% of their clients have at least one alternative investment vehicle in their portfolio.
Looking at the current weightings, 55% of advisors think having 6-15% of the portfolio in alternatives is optimal, 27% think the allocation should be 1-5% while 18% think a 16-25% weighting is appropriate.
True to the concept of what a hedge fund is designed to do, the majority of the advisors surveyed stated that the main reason for investing in alternatives is to reduce volatility and diversify client portfolios. When it comes to selecting an alternative product, the most important items appear to be manager experience and the diversification potential.
For those advisors that don’t use alternative investments at this time, the most common reasons cited included product expense and the viability and basic premise of alternative investments.
Survey finds high net worth, institutional investors bullish on alts
A significant majority of high net worth and institutional investors plan to increase their allocation to alternative funds in 2015, according to a survey conducted by Altegris Advisors.
Findings of the Altegris Investor Survey, conducted at the Strategic Investment Conference, hosted by Altegris and Mauldin Economics, re-vealed that 66% of respondents plan to increase their allocation to alternatives during the second half of 2015 – of which managed fu-tures/global macro (32%) and private equity (28%) ranked as the top asset classes for increasing.
Registered investment advisers (45%) and private investors (31%) put managed futures/global macro at the top of their list, while institutions (36%) put private equity at the top. More than half of respondents (59%) said that alternative allocations should represent 10% to 25% of a diversified portfolio, while 15% thought the number should be between 25% and 50%. Only 23% believe the allocation should be less than 10%.
Record number of hedge funds now operating around world
The hedge fund industry set a new record during the first quarter when an industry research group said 10,149 funds are operating around the world even after hundreds of existing funds shut their doors during the same time.
During the first three months of 2015, 264 new funds were launched, bringing the number of global hedge funds to 10,149, according to Hedge Fund Research data released on Friday.
At the same time, 217 funds went out of business, marking the largest number of liquidations since the first quarter of 2014, the data show.
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