Most allocators predict Asia will be the top performing region in 2005, but perhaps surprisingly exc...
Most allocators predict Asia will be the top performing region in 2005, but perhaps surprisingly exclude China and Japan from this expectation, according to Deutsche Bank's annual landmark investor survey.
The investment bank's Alternative Investment Survey found 25% expected Asia ex-China and ex-Japan thought this region would be 2005's best performing region for hedge funds, followed by Europe (23% of investors) and then the US (19%).
"Investors are acting on their predictions with 73% increasing allocation to Asia excluding China and Japan," the study said. While 55% of investors expect to increase allocations to Europe, 26% expect to add to their US hedge allocations. However, the report noted there was more than twice as much interest from North American investors in the US than there was from European investors.
Deutsche Bank's survey, which polled 650 firms with $645bn in direct hedge fund assets - or nearly two thirds of the world's $1.1 trillion industry - also found 67% of investors expected hedge fund returns overall to fall because of large capital inflows, with investors holding more than 10 years' experience in hedge fund investing more likely to feel this way.
At the strategy level most investors expect equity long/short to be 2005's best performer (35% of respondents), with 22% favouring macro and then multi-strategy (16%), with these strategies not surprisingly the three most held, in that order, in investors' portfolios.
While the voting for long/short and macro reflected last year's rankings, multi-strategy had risen from sixth place on expected returns in 2004, to second this year.
In addition 58% of investors expected to add to their equity long/short allocations, and 59% foresee adding to their macro allocations. This strategy seemed particularly important for pensions and endowments, with nearly 75% of respondents from these groups planning to this strategy. However a strategy did not have to rank high in expected returns to be of interest to allocators - credit long/short was not among the top 10 in expected returns, but 47% of pensions, endowments and foundations expected to increase to this area.
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