10/08/2011 Author: Kirstie Brewer

Institutional mandates gather pace in Q2 

Inflows from high-net-worth investors and small institutions remained steady in Q2, as interest finally crystallised into actual investment activity, according to the latest research from investor research firm Brighton House Associates (BHA).

According to BHA, which speaks to around 1,200 active investors every quarter, US managers had a particularly encouraging period, with the number of mandates gathered increasing by over 8.1%.

Fund of hedge funds (FoHF) mandates fell by 14%, with investors favouring single-manager hedge fund exposure at their expense. However, Brighton House sees the rise of customised funds of funds as a potential shot in the arm for the FoHF sector.  

“Despite what may seem a gloomy outlook for funds of funds, BHA predict a move towards customised FoHFs, allowing investors who have grown in confidence to obtain more portfolio discretion,” Ben Kelsey, research manager at BHA said.  

Kelsey believes that commodity managers will also benefit from an upswing in interest, particularly as investors seek to de-risk portfolios.

“In view of what happened to global markets last week, hedging against tail-risk by investing in discretionary commodities funds will become more probable and makes a lot of sense. We have seen demand for commodities and other such funds rise by 50% over the first quarter.”