Deutsche Bank recently released its Alternative Investment Survey, the 16th annual. This year the questionnaires received replies from 436 global hedge fund investors, with assets under management of $2.1 trillion, who shared their insights, sentiments, and allocation plans. 

Glenn Bunn, co-head of Prime Finance at DB, said in a statement that 2017 was a transitional year for the industry, with improved performance, positive flows, and a shift in momentum. “One in every two investors plans to grow their allocation to hedge funds in the next 12 months,” Bunn said. “We found that the average respondent expects to boost the size of their portfolio by $129 million this year.”

DB: Investors Newly Optimistic About Hedge Funds

The plans to boost the portfolio owe something, surely, to the performance in 2017, when the average respondents hedge fund portfolio had achieved a year to date return (before December numbers became available) of 7.97%. The comparable number a year before was just 2.99%.

One of the Most Comprehensive

The respondents come from 21 different companies, and DB describes the survey as “one of the most comprehensive in the industry, focused on pension funds, sovereign wealth funds, endowments, foundations, insurance companies, consultants and funds of hedge funds.”

Over the year, the HF industry grew by 6.4%; assets under management reached the record figure $3.21 trillion at year’s end. In last year’s survey, investors’ predictions had fallen a bit short, holding that the year’s end figure would be $3.14 trillion.

For the year to come, respondents are predicting further expansion, and a year’s end AUM of $3.42 trillion.

Half of the respondents expect to increase their own allocation. Another 39% said they will maintain their allocation where it is, so that only 11% plan to reduce it. Last year, only 37% of survey respondents were saying they expected to enhance this sliced of their portfolio, 41% expected to hold to the status quo, and 22% planned to reduce.

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