Fees on global hedge funds rise in 2012

In 2012, the report adds, average management fees stood at 1.8 percent, up from 1.6 percent in 2011 and 1.7 percent in 2010.

When asked which alternative investment attributes resonate most with them, “reduced portfolio volatility” and “provide more diversification” ranked highest at 4.6 on a scale from one to five, one indicating least important and five most important.

Other attributes that ranked lower on the performance scale were “risk reduction” (3.7), “provide greater return opportunity” and “more alpha” (2.6), hedge against inflation/real returns (2.2) and defensive play/bear market protection (2.1).

Turning to the top strategies being considered for development or current in development, the Cerulli report flags long/short/extension strategies (11 percent currently in development; 39 percent considering development), multi-alternative or alternative allocation strategies (11 percent and 28 percent, respectively); and currency strategies (11 percent and 28 percent, respectively).

“U.S. managers are focusing on strategies that can broadly diversify the portfolio (with the exception of currency, usually used for alpha generation),” the report states. “Managers are moving away from strategies that previously showed more promise, including private equity, hedge fund replication, alternative energy and bear market [strategies].”