Hedge fund assets will reach an all-time high this year, driven by increased institutional participation, according to Deutsche Bank’s 10th annual Alternative Investment Survey, released last week.

Following are survey highlights:

  • Investors predicted continued growth, with an estimated net inflow of $140 billion in 2012, taking industry assets under management to a record high of $2.3 trillion by year-end.
  • Institutions are driving growth and now account for approximately two-thirds of hedge fund assets, compared with less than one-fifth in 2003.
  • Industry consolidation will continue, and big, successful funds will grow even bigger. Forty-four percent of respondents said they were invested in $1 billion-plus managers, up from 25% in 2009. Nearly a third planned to allocate to managers with more than $1 billion under management.
  • Eighty percent of respondents ranked performance as one of the five most important factors in manager selection, as investors remain committed to seeking talented, top-performing managers irrespective of size.

Some 400 investor entities worldwide, representing $1.4 trillion in hedge fund assets, took part in the Deutsche Bank survey, which was conducted in December.

Respondents included family offices, funds of funds, private banks, public and private pensions, foundations and endowments, government organizations and investment consultants. Nearly half of the investors surveyed individually manage and/or advise upward of $1 billion in hedge fund assets, Deutsche said in a statement.