17/08/2011 Author: Kirstie Brewer

Nordic investors predict hedge fund growth

Nordic investors have a positive outlook on hedge fund investment, with allocations expected to grow further during 2011, according to SEB’s latest Nordic Hedge Fund Investor Survey.

The survey bodes well for the industry, with 32% of the investors expecting to increase their allocations to hedge funds, in stark contrast to the 2% expecting to decrease their allocation limits to the asset class, down from 14% last year.  
Respondents to the survey, largely made up of pension funds and insurance companies representing over $600bn of assets under management, displayed an appetite for funds with AuM levels at $250m to $1bn.

Despite the renewed activity most investors have not yet breached their maximum allocation limits, suggesting a period of continued inflows across a range of hedge funds strategies.  

Global macro, event driven and long/short equity are all expected to lead the pack in terms of performance, according to the survey, while investors also appreciate the risk-reducing effect a market neutral fund can have on the total portfolio.
The survey also found that most Nordic investors look for hedge funds with a two-year track record and monthly liquidity.

Investor interest is mostly driven by the strength of a fund’s strategy, with the legal structure being a secondary consideration, the survey suggested. Investors displayed no real sensitivity to fee structure, taking the view that proper alpha is worth the price tag.