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Portfolio > Alternative Investments > Hedge Funds

Hedge refund returns outpace expectations in 2013

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More than one in five investors say that hedge fund returns in 2013 have exceeded expectations.

That a key conclusion of a survey to appear in a Preqin 2014 Global Hedge Fund Report. The research polled 148 institutional investors with more than $60 billion invested in hedge funds to ascertain their outlook on the industry for next year.

The survey also discloses these findings:

  • 21 percent of investors state that expectations on returns had been met.
  • Just 16 percent of investors believe that returns expectations had not been met, a noticeable decrease from the 41 percent that stated the same for 2012 in the previous year’s survey.
  • Hedge funds have posted 2013 year-to-date returns of 10.04 percent as of Nov. 30, compared to 8.24 percent in the same period in 2012.
  • 29 percent of investors say they are looking for hedge funds to produce high absolute returns.

The average net annualized return during the past two years is 10.03 percent (as of November 2013) and the benchmark has been in negative territory just four times out of 23 months since the start of 2012.

“At the start of 2013, we predicted that a need for solid performance and regulation would be key issues for hedge funds in 2013, the report notes. “Certainly the year has proven both of these predictions to be true, and in terms of performance it appears that many hedge fund managers have fared well this year, and investors are largely satisfied with how the industry has performed.

“The proportion of investors who felt that their returns expectations had not been met has fallen to its lowest level since Preqin started gathering this information, in noticeable contrast to 2012 and 2011, when dissatisfaction was at high levels among institutional investors,” the survey adds. “As other results in our forthcoming 2014 Preqin Global Hedge Fund Report show, investors are looking for more than just the size of the returns their funds are posting. Strong risk-adjusted returns as well as consistency and low volatility of performance numbers are also key attributes sought from hedge fund investments.”


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