Preqin’s Hedge Fund Investor Profiles database currently tracks 335 institutional investors in hedge funds located outside of North America, Europe and Asia. These investors collectively represent more than $5.5tn of assets under management (AUM), with average AUM of $22.6bn each; this group represents a significant capital source for fund managers.
Many of these investors are based in Australasia (59%) and one fifth are based in the Middle East. As seen in the chart below, superannuation schemes are the most numerous hedge fund investors based outside of North America, Europe and Asia, accounting for 29% of investors. These are followed by fund of hedge funds managers (16%) and asset managers (13%). Foundations have a smaller presence in these regions, accounting for only 2% of investors, unlike North America, where they pioneered alternative investments and account for 29% of hedge fund investors in the region.
The strategy most favoured by investors based outside of North America, Europe and Asia is long/short equity, with 53% of investors showing a preference for the strategy. The next most favoured strategies are multi-strategy (38%), macro (36%), long/short credit (26%), event driven (24%) and managed futures/CTA (24%).
Many of these investors prefer to make only direct investments in hedge funds (46%), while 18% exclusively utilize funds of hedge funds. In contrast, 39% of investors based in North America, Europe and Asia exclusively invest directly in hedge funds, with 27% using solely funds of hedge funds. The majority of investors based outside North America, Europe and Asia will consider investing in emerging managers (58%) and many will invest in spin-off teams (49%); however, only 34% will consider seeding a fund.
Investors located outside the most developed hedge fund markets form a significant portion of capital available to hedge fund managers and are likely to grow in importance as they become more established and confident in the space.