- Institutional investors are turning back to hedge funds after the industry underperformed through the first half of the year, according to the latest Bloomberg Mandates survey.
- Of the 50 allocators surveyed, nearly half either increased their stakes in hedge funds in the start of the summer or plan to over the next six months. Hedge funds saw the most overall increases among six alternative asset classes.
- The rebound in interest comes after a majority of hedge funds underperformed the S&P 500 through the first half of the year and the industry posted its ninth straight quarter of outflows.
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Major investors are reviving their interest in hedge funds after the industry’s lengthy slump, according to the latest Bloomberg Mandates survey.
Nearly half of the 50 institutional investors surveyed by Bloomberg increased their allocations to hedge funds at the start of summer or plan to do so later in the year. The share is the largest among six types of alternate investments. Private debt saw the second largest proportion of increased stakes.
Venture capital firms saw the smallest stated increase from re-positionings. All six categories had many investors either state “no change” or “not applicable” regarding their rebalancing to different assets. Yet real assets — commodities or collectibles — was the only class to post a larger decrease than increase.
The update arrives after hedge funds posted their ninth straight quarter of net outflows and largely underperformed through this year’s market turbulence. While many funds successfully rode out the market’s downturn in February and March, the majority of hedge funds tumbled more than the S&P 500 through the first half of the year, according to Hedge Fund Research. Bloomberg’s latest survey suggests major players still believe in the industry.
The survey took place from May 14 to June 10 and included entities such as family offices and pensions with more than $500 billion in assets under management.
Long-short equity strategies were most popular among hedge funds surveyed over the period, while long-short credit funds saw the least interest.
Hedge funds are also cropping up throughout the financial sector after widespread closings. Pitches for new funds and reopenings of closed offices were tied as the most popular ideas among respondents.
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