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37% of Asia-Pacific Investors Intend to Increase Hedge Fund Allocation

by Graeme Terry

  • 20 Mar 2012
  • HF

According to a recent Preqin survey, 37% of Asia-Pacific institutional investors plan to increase their hedge fund allocations over the course of 2012. Only 6% of these investors plan to decrease their allocation over the coming year which suggests that demand for hedge funds in this region is strong. These results are similar to the proportions of investors based elsewhere around the globe. Demand for hedge funds in the Asia-Pacific region is growing and investors based in this region are becoming progressively more demanding of their managers.

The results of the survey show that many Asia-Pacific investors will be looking to make new allocations in 2012 and 23% of these investors indicated that they plan to invest solely with new managers over the next 12 months. This suggests that there could be significant allocations to new relationships from investors in this region as a result of investors aiming to improve portfolio returns. Only 12% of investors stated that they would be solely maintaining existing relationships in 2012 which again suggests that investors are looking for ways to improve their hedge fund portfolios. The majority of Asia-Pacific managers are looking for investments with single manager hedge funds rather than funds of hedge funds.

Global macro and long/short equity are the preferred strategies amongst Asia-Pacific investors looking to invest over the next 12 months with 44% indicating a preference for macro hedge funds and 42% for long/short equity hedge funds. The majority of investors (83%) will consider investments in the Asia Pacific region with 61% willing to consider North America and 44% willing to consider Europe. Many investors look to invest in the Asia Pacific region in order to gain exposure to an area they are familiar with but North America and Europe are also popular as they can provide access to more experienced managers and better infrastructure.

The survey reveals that transparency at fund level, fund performance and track record/firm reputation are the three most important criteria for Asia-Pacific investors when selecting hedge fund managers. Transparency is becoming increasingly important for investors in this region and managers that can meet investor demands in this area are likely to be most successful in picking up key institutional mandates from these investors. As a result managed accounts are popular amongst these investors and 12% of Asia-Pacific investors looking to allocate to single manager hedge funds in 2012 plan to do so via separately managed accounts.

Hedge fund managers are beginning to take notice of Asia-Pacific institutional investors and the results of the Preqin survey indicate that interest in hedge funds in this region is continuing to grow. It is expected that allocations to hedge funds amongst Asia-Pacific investors will continue to increase over the next few years, providing hedge fund managers react to the increasing investor demands regarding transparency, liquidity and performance.

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