- Advertisement -
- Advertisement -

Related

The Breakout Year

Industry Report

- Advertisement -

Stockholm (HedgeNordic) – Investors pulled an estimated $30 billion from hedge funds in 2020, marking the third consecutive year of net outflows for the hedge fund industry. But “2021 could be a breakout year,” says Barclays. “Investor interest in hedge funds is the strongest in years,” with the industry expected to attract $10 billion to $30 billion of net inflows in 2021. The estimates stem from Barclays’ most recent Strategic consulting survey of 240 investors, who collectively account for about 22 percent of the hedge fund industry’s capital.

“2021 could be a breakout year, with a projected $10 billion to $30 billion of net inflows.”

According to Barclays’ 2021 Global Hedge Fund Industry Outlook and Trends report, all investor types indicated plans to increase their exposure to hedge funds in 2021, with family offices and private banks indicating the most bullish plans. The survey results show that 41 percent of investors plan to increase their hedge fund exposure. “The large, established hedge funds are still going to get the bulk of the money, but compared to 2020, there will be more allocations to managers outside of existing relationships,” Roark Stahler, U.S. head of strategic consulting at Barclays, tells Bloomberg.

The hedge fund industry experienced net outflows of $30 billion last year, with investors redeeming more than initially planned in 2020 as the coronavirus pandemic “made cash a premium for a number of investor types,” writes Barclays. The coronavirus pandemic also disrupted investors’ allocation process due to the restrictions imposed in response to Covid-19. “Because of the difficulty conducting operational due diligence under quarantine and social distancing, many investors opted to stick with existing hedge fund relationships last year rather than establish new ones,” writes Barclays.

“Because of the difficulty conducting operational due diligence under quarantine and social distancing, many investors opted to stick with existing hedge fund relationships last year rather than establish new ones.”

The challenges for fund investors to undertake their due diligence, in particular face-to-face meetings, forced 97 percent of the surveyed investors to adjust their operational due diligence processes. More than half of these investors expect to continue those changes in a post-pandemic environment. Respondents also indicated that about 60 percent of their staff are expected to be back at the office by the end of June, but they are unlikely to take in-person meetings with fund managers until the second half of next year at the earliest.

“After generally not expanding their hedge fund rosters in 2020, investors appear likely to begin forging new hedge fund relationships again as they allocate an estimated gross of $450 billion throughout 2021.”

“After generally not expanding their hedge fund rosters in 2020, investors appear likely to begin forging new hedge fund relationships again as they allocate an estimated gross of $450 billion throughout 2021,” writes Barclays. The key drivers of allocations to hedge funds differ across investor types, with the main objectives including diversification, risk mitigation, and potential to earn equity-like returns with bond-like risk. According to Barclays, the most popular hedge fund strategies in 2021 are sector-specific equity managers, market-neutral stock-pickers, and discretionary macro managers. Generalist equity funds, on the other hand, are least in favor.

 

Photo by Possessed Photography on Unsplash

Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Eugeniu Guzun
Eugeniu Guzun
Eugeniu Guzun serves as a data analyst responsible for maintaining and gatekeeping the Nordic Hedge Index, and as a journalist covering the Nordic hedge fund industry for HedgeNordic. Eugeniu completed his Master’s degree at the Stockholm School of Economics in 2018. Write to Eugeniu Guzun at eugene@hedgenordic.com

Latest Articles

Rising Adoption of Quantitative Investment Strategies Among Nordic Investors

From a high-level perspective, there is a clear trend of increasing adoption of quantitative investment strategies (QIS) among Nordic institutional investors, either through the...

EU Plans Stress Test for Hedge Funds and Non-Bank Firms

European regulators are planning a stress test to identify vulnerabilities beyond the traditional banking sector, focusing on less regulated entities such as hedge funds,...

ALCUR Fonder Continues Hiring Spree

Following two earlier additions this year, ALCUR Fonder continues to expand its portfolio management team at a notable pace. The Stockholm-based hedge fund boutique...

Nordic Private Markets Modernize with Data-Centric Trade Lifecycle Automation

By Anders Stengaard Jensen at Indus Valley Partner: In recent years, asset managers in Nordic countries have accelerated efforts to modernize trade operations, particularly...

Norwegian Hedge Fund Industry Sees Major Boost with New Launch

The Swedish and Danish hedge fund industries remain closely matched in size, with Denmark recently edging ahead of Sweden. While still less than half...

Atlant Funds Hold Up in May Despite Mistimed Market Call

Macroeconomic and market forecasts are notoriously difficult, even for experienced hedge fund managers. What matters more than being right, however, is ensuring that incorrect...

Allocator Interviews

In-Depth: High Yield

Voices

Request for Proposal

- Advertisement -
HedgeNordic
Privacy Overview

This website uses cookies so that we can provide you with the best user experience possible. Cookie information is stored in your browser and performs functions such as recognising you when you return to our website and helping our team to understand which sections of the website you find most interesting and useful.