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Hedge funds face positive investor momentum : study

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On the 07/09/21 at 7:55AM

by

Adrien Paredes-Vanheule

Hedge funds see positive investor momentum according to the latest Investor Intentions report released on Thursday by business intelligence provider HFM and the Alternative investment management association (Aima). Out of the 108 investors surveyed, with $7.6trn in total assets, 80% said they were satisfied with the performance of their hedge fund investments in the first half of 2021. In the period running from end 2020 to end May 2021, hedge funds’ net inflows reached $57.8bn after 2020 outflows of $23.4bn (data was aggregated from 128 hedge funds).

The survey found out over a third of investors plan to increase their allocation to hedge funds and a further 51% to keep their current allocation to the asset class. The existence of exciting new opportunities is cited as the main reason for an increase in hedge fund allocation while other investors cite strong return expectations.

The study unveiled potential winners among hedge funds in the second half of 2021. Global macro strategies are likely to see the strongest inflows in H2’21 (32% of investors planning an increase), with investors particularly interested in the strategy’s ability to hedge against rising inflation, said HFM and Aima. Moreover, long/short equity and multi-strategy funds can expect significant investor interest as well, with 31% planning increases. The report also concluded that allocation to private credit remains the most popular strategy among investors to counter low fixed income yields.

HFM’s chief data officer Elias Latsis noted hedge fund managers posted the strongest first-half returns since 2009 during H1 “and are on track to achieve the best Sharpe ratio since 2017.”

Tom Kehoe, managing director and global head of research and communications at Aima added, “If the industry’s performance in H1 can be sustained for the rest of the year, it will have generated its highest returns for investors in over a decade.”

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