After another volatile year for global markets, hedge funds alike have had to respond to the emergence of the omicron coronavirus variant and the highest inflationary pressures in almost 40 years. In 2021, the average hedge fund was up high single digits and the industry saw an estimated US$20 billion of net inflows, bringing industry assets to its peak of approximately US$4 trillion.
In December 2021 the Capital Introduction team within BNP Paribas’ Prime Services business surveyed 224 allocators (e.g. institutional end investors, intermediaries and private investors) from 16 countries (65% in Americas, 29% in EMEA and 6% in APAC). Together, those surveyed invest or advise on US$1.2 trillion in hedge fund assets, representing approximately one third of industry assets under management. The report provides insight to better understand investor sentiment with respect to performance and asset allocation plans to hedge funds and other alternative investments.
Some of the key findings:
The hedge fund outlook for 2022 is optimistic with the average allocator in our survey looking to add almost a quarter of a billion dollars to hedge funds. We at BNP Paribas have built a world-class multi-asset prime services platform that is well-positioned to support this growth and achieve our ambition in becoming the largest European Prime Broker to global hedge funds. We are pleased to present these findings and grateful to all investor participants, clients and colleagues for their continued support.
Ashley Wilson, Global Head of Prime Services at BNP Paribas
With rising rates and geopolitical uncertainty, our report shows that investors are increasing their allocations to low beta hedge funds that can achieve high single-digit returns. The strong net asset inflows we expect to see in 2022 will be met with some volatility as investors reallocate capital from traditional long only funds into hedge funds, move some capital out of hedge funds into private markets as well as rotate capital within the hedge fund space. We would like to thank our investor relationships globally for taking the time to participate in this survey and provide us with these invaluable insights.
Marlin Naidoo, Global Head of Capital Introduction at BNP Paribas