Survey: Hedge Fund Assets to Hit Pre-Crisis Peak

(April 7, 2010) – A Credit Suisse Group AG survey of institutional investors reveals that global hedge fund assets will hit its pre-financial crisis peak of nearly $2 trillion by the end of 2010.

Credit Suisse’s Annual Hedge Fund Investor Survey, released yesterday, of roughly 600 institutional investors showed that investors believed industry assets may grow 25% from $1.6 trillion at the end of 2009.

The Zurich-based lender polled institutional investors with a combined $1 trillion in assets under management, or above 60 percent of the industry total.

Hedge fund industry performance in 2009 was the best year since 1999 and industry experts predict the upward trend to continue. According to the survey, assets are expected to expand even as investors take more time to make allocation decisions, demand more transparency and cut the number of holdings, Bloomberg reported.

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The Credit Suisse survey showed that Asia-Pacific will likely be the biggest beneficiary among all geographies, with 61% of investors indicating they are upping their allocations to managers focused on the region.

“This appetite for Asia-Pac is a clear illustration of the strong recovery in investors’ risk appetites and search for returns, as investors had actually planned net decreases to Asia-Pac at this time last year,” said Edgar Senior, managing director and head of capital services at Credit Suisse in London, in the release. “This reversal was confirmed by the record attendance at our Hong Kong Hedge Fund forum recently, where sentiment was dramatically more positive than in March 2009.”

Additionally, investors indicated they are most likely to add investments in macro and event-driven funds. Sixty-seven percent of investors plan increasing allocations to macro funds, with 62% of investors increasing allocations to event-driven funds.

Survey respondents were polled on issues ranging from fee negotiations to the most popular investment strategies. Respondents said hedge fund industry assets are expected to increase 20% from the start of 2010 — they indicated planning to add to their existing hedge fund investments by an average of 9% or $148 billion across the industry, with the remaining 11% coming from investment gains.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742

(April 6, 2010) — Australia’s ‘universal fund’ proposal — a plan to set up a new default-type category of low-cost funds with limited features for disengaged investors — has been criticized by the $1.2 trillion superannuation industry.

The recommendations have been suggested by the long-running Cooper Review of Australia’s retirement savings industry, chaired by Jeremy Cooper, designed to overhaul the governance, efficiency, structure and operation of Australia’s Superannuation System.

Under the proposal for low-cost funds, the universal fund would have less features than existing funds and would be the default for people who are disinterested in selecting the type of fund they invest, according to The FT. An overwhelming majority — approximately 90% — of investors would currently fit into that category.

In response to the Cooper proposals, a coalition of five superannuation industry organizations have argued that creating a regime for universal funds would result in higher cost for users and greater complexity.

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Other critics of the universal fund argue that the Cooper proposals are simplistic, confusing fund choice with investment choice and forcing people into specific categories. Pauline Vamos, chief executive of the Association of Superannuation Funds of Australia, said to The FT that the superannuation industry “should be set up for all types of members”, and also reflect the fact that people shift their focus on retirement savings as they get older.

Industry analysts say the federal government’s Cooper review to streamline Australia’s superannuation system, mandating the use of electronic transactions for example, could save $1 billion a year in unnecessary costs.

The Cooper Review of superannuation may also result in banning financial advisers from taking commissions when selling investments and pensions, as well as requiring financial advisers to set their commissions completely in dollar terms, The Australian reported.

The review changes could be introduced as soon as the end of 2011.

To contact the <em>aiCIO</em> editor of this story: Paula Vasan at <a href='mailto:pvasan@assetinternational.com'>pvasan@assetinternational.com</a>; 646-308-2742