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Institutional hedge fund allocations remain ‘steadfast’, survey shows

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Almost all institutional investors expect to maintain or increase allocations to hedge funds for the rest of 2015 despite concerns over fee structures and market volatility, research shows.

A mid-year survey from Credit Suisse shows 93% of institutions around the world will keep faith in hedge funds, an increase of 3% from the start of the year.

The survey, covering 200 institutional investors with $700bn (€634bn) of hedge fund allocations, also showed EMEA investors favoured global macro strategies compared with their US counterparts, which prefer equity long/short investments.

Overall, 46% of investors selected global macro as investment style of choice, while 44% went for event-driven, matching the selections made at the start of the year.

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Around two-thirds of investors preferred their hedge fund strategies to be invested in the US and Europe.

Credit Suisse said multi-strategy hedge funds had grown in popularity over 2015, ranking the 14th most popular at the start of the year but rising to sixth in the July edition.

Robert Leonard, managing director of capital services at Credit Suisse, said: “Despite ongoing volatility in the global marketplace, investors remain steadfast in their allocations.”

He said the increasing appetite for mulit-strategy funds was a reflection of the volatile environment, with investors keen to take advantage where possible.

Hedge funds’ relationship, particularly with pension funds, has become notably strained of late, as €156bn Dutch healthcare worker scheme PFZW and US giant CalPERS dropped allocations, primarily over cost concerns.

PFZW said the asset class no longer aligned with its investment policy or its criteria based on sustainability, complexity, cost and contribution to index-linking.

Nordic investors including PKA, Ilmarinen and ATP also shunned hedge funds late last year, shifting towards replication strategies with additional risk controls.

Around 40 of the 200 responses in the Credit Suisse report came from international public and private pension funds.

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