20/04/2011 Author: Will Wainewright

Goldman Sachs survey predicts 14% growth 

Hedge fund investors expect industry growth of 14% this year but have little appetite for funds with lock-up periods of more than 12 months, the latest Goldman Sachs investor survey has revealed.

The investment bank’s prime brokerage unit, which surveyed 545 allocator groups, with a total of $1.1trn invested in hedge funds, in late January, found that global, emerging markets and Asia-dedicated funds look set to benefit most as investors look East.

However, investors’ continued preference for funds with short lock-up periods after 2008 may alarm managers, with 90% of planned allocations going to firms which don’t gate money for more than a year.

Their forecast of 14% industry growth provides brighter news – such a boost would expand the sector to almost $2.1trn by December, from its present estimated level of $1.9trn.

Investors tipped CTA/managed futures, event-driven and commodities strategies to receive the most inflows this year, with a reduction expected in exposure to credit-based strategies.

Market conditions are expected to be most favourable for long/short equity, event-driven and global macro strategies.

The survey also suggests that annual portfolio turnover is slowing to historically average levels of 15-18% after peaking at 30% in 2008.