- Advertisement -
- Advertisement -

The Breakout Year

- 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

First Non-Swedish Family Office Investment for Protean Small Cap

Stockholm (HedgeNordic) – About one year after the successful launch of their long/short equity fund Protean Select, Pontus Dackmo and Carl Gustafsson introduced a...

Atlant Högräntefond Leads Peers on Third Anniversary

Stockholm (HedgeNordic) – Around mid-March 2021, Swedish hedge fund boutique Atlant Fonder launched a UCITS-structured fixed-income fund investing in Nordic corporate bonds, drawing from...

Rhenman Welcomes Brummer & Partners Sales Veteran

Stockholm (HedgeNordic) – After close to 18 years as an institutional sales professional at Brummer & Partners, Tom Josephson is set to join healthcare-focused...

Untapped Potential in Symmetry’s Small-Cap Portfolio

Stockholm (HedgeNordic) – Small-cap-focused hedge fund Symmetry Invest has achieved an annualized return of around 20 percent over the past five years and over...

Navigating Asia-Pacific’s Transition to Sustainable Growth

Stockholm (HedgeNordic) – Emerging markets in the Asia-Pacific region, such as China, India, Indonesia, the Philippines, Thailand and Vietnam, have experienced significant economic expansion...

The Performance of US Equities in Election Years Over the Last Century

By Daniel Ung, Kartik Chawla, and Jędrzej Miklaszewski – SPDR: The 2024 US presidential election is on the horizon, and investors are keen to...

Allocator Interviews

Latest Articles

In-Depth: Emerging Markets

Voices

Request for Proposal

- Advertisement -