Hedge Funds Record AUM

Survey: Hedge Funds Could Reach Record AUM in 2012

A survey of hedge fund investors by Deutsche Bank AG suggests that global hedge fund assets under management could reach record levels this year. As investor confidence in hedge funds climbs, assets under management across the industry could reach $2.26 trillion. That would mean inflows of about $250 billion to hedge funds for this year as investors look to reduce cash.

The industry may see $250 billion of net inflows and performance gains this year, according to the survey. The number of investors with 10 percent to 30 percent of their holdings in cash is expected to halve in the next six months, helping free up $39 billion for potential hedge fund investments, the survey showed.

Investors are betting on positive returns and growth in hedge funds even after market selloffs followed by “quick and exaggerated snapbacks” made it difficult for many managers to consistently make money last year, according to the report. Hedge funds globally lost 5 percent on average, the second-worst annual return since Chicago-based Hedge Fund Research Inc. began to track data in 1990.

“Performance is key in a low-yield environment,” said Anita Nemes, London-based global head of capital introductions in Deutsche Bank’s prime finance division, in an e-mailed statement. “Institutional investors recognize the potential for strong hedge fund returns in 2012.”

Deutsche Bank in December polled 392 investors who controlled $1.35 trillion of hedge fund assets, including pensions, foundations, endowments, government organizations, funds of funds, private banks, investment consultants and family offices. Source

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