08 March 2017
London
Reporter: Mark Dugdale

Hedge fund assets tipped to rise


Performance-based gains will drive hedge fund assets to reach $3.14 trillion by the end of 2017, a new survey has predicted.

Deutsche Bank’s annual alternative investment survey of 460 global hedge fund investors revealed that close to three quarters expect their portfolios to perform better in 2017 than they did last year.

A breakdown of 2016 showed significant return dispersions in hedge fund performance, with top quartile funds returning +11.22 percent on average, while bottom quartile managers were down -6.86 percent.

Investors, who are paying management and performance fees of 1.59 and 17.69 percent, respectively, are increasingly turning to quantitative strategies to boost returns.

Some 79 percent of all respondents to Deutsche Bank’s survey allocate to systematic strategies, up from 70 percent last year. Close to half of survey respondents also plan to increase their allocation this year.

Marlin Naidoo, Americas head of the hedge fund capital group at Deutsche Bank, said: “The rise of quant is accelerating with 79 percent of investors allocating to the space.”

“The number of strategies available has been growing and now range from simple low fee alternative risk premia products to more complex high alpha products that have seen further enhancements due to the advances in areas such as machine learning, quantum computing and the cloud. This has contributed to the additional interest and demand.”

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