Funds of Hedge Funds targeting long/short equity funds.

by Graeme Terry

  • 05 Sep 2011
  • HF

Preqin currently tracks 601 fund of hedge funds managers that are actively investing in hedge funds. Of these investors 48% are based in North America, 40% in Europe and 11% in Asia and Rest of World. Long/short equity remains the most popular hedge fund strategy utilised by funds of hedge funds with 70% of these investors indicating this as a strategy preference.

Recent Preqin research has shown that 54% of fund of hedge funds have fixed plans to make new investments over the next 12 months. In addition to this it is expected that many more will make further investments on an opportunistic basis as part of their natural portfolio turnover. The research also indicated that 87% of all investors planning to make investments in the next 12 months include long/short equity as a strategy preference meaning that this strategy remains attractive to investors looking to invest in funds of hedge funds.

Funds of hedge funds looking to boost their long/short equity exposure include Blue Rock Advisors who plan to add seven long/short equity funds to their portfolio over the next 12 months. In August, USD 2 billion funds of hedge funds manager SAIL Advisors launched a new long/short equity focused fund of hedge funds vehicle which will initially invest with its existing managers before branching out to include other investments.

Long/short equity funds remain the most popular strategy amongst hedge fund investors and investment in the area is expected to continue to grow over the next few years. As a result it is likely that funds of hedge funds managers will continue to add these funds to their portfolios as part of their plans to increase their overall level of investment.


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