Hedge Funds Buoyed in First Half by Private Wealth Allocations

Hedge fund managers may be feeling competitive pressure for investor assets, but their fundraising is thriving.

Alternative investments data provider Preqin reported Thursday that 73% of some 100 hedge fund managers it surveyed in June said competition in fundraising had become more intense over the past 12 months.

Yet, 64% of respondents — single-fund and fund-of-funds managers — said their assets had increased during the first half.

As well, 61% of firms that managed alternative UCITS and 50% of those that offered alternative mutual fund products reported net inflows.

“Although the first half of the year has been rocky, with performance proving underwhelming and investor satisfaction with the industry starting to wane, it has nevertheless been a successful one for many managers,” Amy Bensted, Preqin’s head of hedge fund products, said in a statement.

“Interest from a wider group of investors, particularly those in the private wealth arena and retail clients, is leading to a proliferation of new structures, in particular liquid alternatives, to cater to new markets.”

Bensted said this was providing more product options to all hedge fund investors, and had driven the growth in assets in the hedge fund sector.

Hedge fund assets under management totaled $2.9 trillion as the end of July, up from $2.7 trillion at the end of 2013, she said.

“Looking forward to the end of 2014, 77% of the hedge fund managers that participated in our June study stated that they believe industry assets under management will grow further in the second half of the year.”

High-Net-Worth and Retail Inflows