RESEAR CH
Positive Outlooks for 2014 Interviews with managers show confidence in industry PREQIN MANAGER SURVEY
Graeme Terry takes a look at the challenges hedge fund managers face and their outlook for the year ahead, based on interviews with over 100 hedge fund managers worldwide.
P
reqin conducted a series of interviews with over 100 hedge fund managers in November 2013 in order to find out about the pressures
they are currently under as a manager and their outlook for 2014. Hedge fund managers were asked to give their opinion on a variety of topics, including their experience of changing assets under management in 2013, future growth potential for the industry, and current challenges for fund managers.
Changes in industry AUM At the end of 2012, 62% of fund managers predicted that hedge fund assets under management would increase over the course of 2013. These fund managers were proved right, with the industry adding approximately $255 billion over the course of 2013. The managers that participated in the latest study in 2013 are even more positive about the outlook for growth in 2014; 83% feel the industry will grow as a result of inflows and performance, and just 2% feel the industry will suffer net outflows (see Fig.1). This is in contrast to the 11% of fund managers surveyed at the end of 2012 that reported that they felt the industry would decline in terms of assets under management in 2013.
Although there are concerns surrounding regulation, the strong performance and solid growth of the industry in 2013 has led to an improvement in the outlook among fund managers on the global hedge fund industry for 2014. The overwhelming majority of fund managers are optimistic for the year ahead: 73% reported they are positive, with just 1% reporting to Preqin that they are negative about the outlook for the industry in 2014 (see Fig.2).
This is a significant improvement in the level of optimism from the industry compared to last year, when 55% of fund managers reported they felt 2013 would be positive, and 44% were negative about the opportunities in the industry over the year.
Institutional assets An increase in the proportion of assets coming from institutional pockets over the past year has been reported by 41% of fund managers who have reported to Preqin. In fact, the proportion of total industry capital coming from institutional investors is the highest it has ever been, at 65% of the total industry assets under management. Although more than half of fund managers surveyed reported they have not had any changes to the proportion of their capital coming from institutional investors,
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Fig.1 Proportion of hedge fund managers that feel hedge fund industry assets under management will increase, decrease or stay the same in 2014
Source: Preqin Hedge Fund Manager Interviews, November 2013
Decrease 2% Increase 83% Stay the same 15%
Fig.2 Hedge fund manager outlook for the hedge fund industry in 2014 Source: Preqin Hedge Fund Manager Interviews, November 2013
Negative 1%
Neutral 26%
Positive 73%
Fig.3 Proportion of hedge fund managers that have noted a change in the proportion of capital coming from institutional investors in 2013
Source: Preqin Hedge Fund Manager Interviews, November 2013
Increased 41% Stay the same 52%
Decreased 7%
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