Hedge funds set to grow

HEDGE fund investors expect a bumper 2011 with assets likely to reach an all-time high of $2.25 trillion (£1.38 trillion), a survey yesterday found.

Net inflows to funds globally are expected to almost quadruple in 2011 to $210bn from $55bn in 2010, the Deutsche Bank Alternative Investment Survey found. The industry managed assets of $1.92 trillion at the end of 2010, according to data from US-based firm Hedge Fund Research.

Fund managers expect to cut cash holdings by $29bn in the next six months to put more money to work.

“Bullish sentiment on market performance, flows and industry dynamics were the clear messages conveyed by the investors,” the report said.

High demand from institutional investors is driving growth. More than 80 per cent of sovereign wealth funds, foundation and endowment funds, pension and insurance companies plan to either add to or maintain their hedge fund allocations.

“We believe the industry is poised to continue to become a more and more significant part of the asset management industry,” the report said.