Investor redemptions may be a key theme in the hedge fund sector this year, as twice as many investors intend to reduce their exposure as are looking to increase it, alternatives data provider Preqin reported this week.

“Preqin’s interviews with investors at the end of 2016 indicate that the fundraising challenges of the past year show little sign of abating in 2017,” Amy Bensted, Preqin’s head of hedge fund products, said in a statement.

Some strategies face greater redemption risk than others. Commodity trading advisors, the darling of investors last year, turned in a disappointing performance and may be especially vulnerable.

Preqin based its report on a survey of some 150 active hedge fund investors.

The survey showed that two out of three investors surveyed reported that their hedge fund portfolios had not lived up to expectations in 2016.

This was not true of all strategies. Three-quarters of emerging markets funds met investors’ expectations, as did more than two-thirds of credit strategies.

In contrast, 73% of discretionary CTA holdings and 53% of systematic ones failed to meet expectations. The Preqin All-Strategies CTA benchmark returned just 0.9% in 2016.

Looking ahead, 28% of investors said they expected hedge fund performance to improve in 2017 compared with last year, but 19% expected performance to be worse than in 2016.

As a result, 38% of investors said they would invest less capital in hedge funds over the next 12 months compared with the year before, while 20% expected to increase their allocations.

This trend varied across leading strategies. Twenty-six percent of investors said they would allocate more to relative value strategies funds in 2017, while just 6% planned to reduce their allocations.

At the other end of the scale, 26% of CTA investors and 29% of investors in funds of funds planned to reduce their exposure over 2017, compared with just 13% who expected to increase their investment in either.

Bensted said the prospect of further outflows this year was undoubtedly a concern for firms in terms of both retaining capital and fundraising over the year. “However, with such challenges come opportunities,” she said.

“Those fund managers that can respond to investor demands for greater alignment of interests, harness some of the volatility resulting from uncertain markets and deliver better returns will be best placed to win investor mandates.”