Institutional Confidence One Year On: Have Hedge Fund Investors Recovered from the Crash?

by Helen Wilson

  • 09 Oct 2009
  • HF

Following 2008’s disappointing returns, numerous fund collapses and high-profile scandals, how do investors feel about the hedge fund asset class? In September 2009 Preqin’s analysts undertook a survey of over 50 institutional investors, known to be active in the hedge fund market, with the aim of answering this question.

The results are promising: the majority of respondents state that they are still investing in hedge funds. In total, 80% of the investors that participated in our survey told us that they planned to either maintain their current exposure to the asset class or increase the amount of capital they invest. This is perhaps unsurprising when you consider that 73% of respondents were satisfied with this year’s hedge fund returns, which they stated as either meeting or exceeding their expectations.

That is not to say, however, that investors have been entirely unaffected by the market crash. Our survey revealed that many institutions, although unchanged in their allocations, have changed their investment preferences in light of the recent market turmoil.  Whereas a similar survey conducted by Preqin in October 2008 revealed that fund performance was the greatest consideration for investors in hedge funds, this year fund transparency was the most recurrent response with nearly half of respondents stating it as the most important factor when investing in hedge funds. This proves that investors are becoming more conservative; they are still eager to invest in the asset class, but they are being particularly careful that they invest in the right funds.

To find out more about the results of the survey and to read the accompanying research report, please click here.

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