Hedge fund investors favour long/short strategies

chess_pieces_410Long/short equity is the most favoured strategy among institutional hedge fund investors, according to SEI and Greenwich Associates.

Nearly 82% of those surveyed employ a long/short equity strategy, making it the most popular one, followed by event driven (53%) and credit (42%).

The same survey shows absolute return has emerged as the main objective of hedge fund investing.

“In a year of record volatility and lower returns in many asset classes, absolute return was named the number one objective by nearly one third of respondents,” the report says.

This compares with 21% last year, when institutional hedge fund investors preferred non-correlated investment strategies.

Investors also appear to want greater risk management. Non-correlated strategies, diversification and lowering volatility are their top three goals.

The difficulty of meeting performance expectations has emerged as the main concern for 26% of institutional hedge fund investors, which is more than double the percentage who named it as number one in 2009.

“The year 2011 was an uncommonly rough one for hedge funds, and yet they have continued to see growth with institutional assets as their mainstay,” the report says.

“In this new landscape, investors are pushing the industry to de-risk, to improve operations and governance, to enhance liquidity and to provide more windows into investment processes and decision-making.

The survey was conducted in September and October among 105 institutions in the US, the UK, Canada and Scandinavia.

©2012 funds europe