EUROPE – The chief investment officers at European and US investment managers expect a 32% rise in hedge fund assets under management in the next year, according to a new survey.

The predicted increase in assets under management in the asset class in the next 12 months was 32%, a survey of 62 CIOs at investment management firms found.

Private equity and structured fixed income was seen as rising by 21%, while domestic equities and international equities would see a 17% and 16% rise respectively. Real estate was seen rising six percent.

Ninety percent of the European CIOs polled expected overall assets under management to rise. And both US and European investment chiefs expect increases in assets under management to come from market appreciation (66%) and new client mandates (64%).

“There’s considerable optimism,” said Lindsay Tomlinson, vice chairman of Barclays Global Investors, who presented the survey at a conference in London. But he warned against over-optimism and the danger of forgetting recent history.

Tomlinson, who is also chairman of the UK’s Investment Managers Association (check), added the survey was “a picture of an industry beginning to move forward after a period of gloom and despondency”.

Managers told the survey, which was conducted by Barra in conjunction with Greenwich Associates, that manager skill and transparent investment process were the two most important factors for institutional clients.

Within the investment process, asset allocation and stock selection, at 30% and 23% respectively, were seen as they most important elements.

Most European managers, 59%, would continue to focus on active investment strategies rather than passive of enhanced indexing.