2009 Media Releases

March 25, 2009

Deutsche Bank survey shows shifting priorities for hedge fund investors amidst financial crisis

Deutsche Bank has announced the results of its annual Alternative Investment Survey, which shows the financial market crisis has had a significant impact on how investors select hedge fund managers, with risk management, liquidity and transparency becoming top priorities in 2009.

Over 1000 investors responded to this year’s survey, including funds of hedge funds, family offices, banks, wealth management companies, consultants, pensions, insurance companies, endowments, foundations, and corporations.

“Transparency, risk management, and liquidity are now top priorities for investors as they select their hedge fund managers”, said Jonathan Hitchon, Co-Head of Global Prime Finance at Deutsche Bank. “As a result, we have seen managers of various strategies adjust their structures accordingly.”

Specifically, the focus on liquidity and transparency has led to a jump in demand for managed accounts (individual security portfolios managed by professional investors). 43% of survey respondents are considering investing a portion of their capital through such a structure this year, compared to the 9% of respondents who currently use managed accounts.

Likewise, the liquid nature of Commodity Trade Advisors (CTAs), who focus on long and short trading in futures markets, has seen them become the second most popular strategy among survey respondents in 2009, with 31% expecting to allocate capital to CTAs this year.

Despite continued volatility in financial markets globally, investors are however optimistic about the performance of the hedge fund industry in 2009. Over 50% predict the HFR index will produce returns of between 0-10% this year, while more than 40% expect their own hedge fund portfolios to generate returns between 5-10%.

“Despite the unprecedented challenges faced in 2008, the survey indicates resiliency in the hedge fund industry”, said Barry Bausano, Co-Head of Global Prime Finance at Deutsche Bank.

In terms of region, 46% of respondents expect equity markets in the United States and Canada to offer the best returns in 2009, with China and Asia ex-Japan expected to be the second and third-best performing regions for equities.

Highlights of Deutsche Bank’s Seventh Annual Alternative Investment Survey

  • Transparency and Risk Management are now among the top 5 manager selection criteria. Historically, investors indicated the “3Ps”: Performance, Philosophy and Pedigree to be the most important characteristics when selecting a manager.
  • 72% of hedge fund investors have reduced their exposure to leverage and 63% are not interested in applying leverage to their own portfolios this year.
  • Hedge fund investors are sitting on USD294bn of cash and collectively expect to reduce this to USD212bn over the next 6 months.
  • The larger funds continue to grow and a premier league of hedge funds is emerging: 50% of respondents said they plan to invest in hedge funds with an average AUM of USD800mn - 4bn this year.
  • Macro, CTA (Commodity Trading Advisor), and Equity Long/Short are predicted to be the best performing strategies. Merger arbitrage, event driven, multi-strategy, cash, and asset-backed securities are the least popular strategies with investors going into 2009.

For more information, please contact:

Camilla Anderson (02) 8258 2731


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Last Update: January 31, 2018
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