Institutions looking to exit hedge funds

Institutions looking to exit hedge funds

One quarter of institutional investors are planning to reduce their exposure to hedge funds in the coming year, according to a new report by Coller Capital.


The Coller Capital Global Private Equity Barometer report, which surveyed institutional investors in the Asia Pacific, Europe and North America, found 26 per cent of investors are looking to sell down their hedge fund exposures in the next 12 months.

By contrast, one third of respondents were planning to increase their exposure to other alternative assets such as private equity, infrastructure and real estate, said Coller Capital.

According to the report, 79 per cent of respondents said current volatility in investment markets will not affect their plans to invest in private equity.

The "biggest concerns" for institutional investors about private equity funds were their size and market competition.

"Concerns about GP [general partner] strategy drift, manager continuity and succession, private equity fund terms and GP reporting have all receded somewhat since the [last report]," said Coller Capital.

More than half of institutional investors surveyed for the report have exposure to Chinese private equity, the report continued.

"Fifty-five per cent of [institutional investors] are currently invested in Chinese private equity, with over 40 per cent of [investors] having exposure to South East Asia and India," it said.

"Just over a tenth of [investors] are currently invested in Africa and the Middle East."

More than two fifths of the investors surveyed said private equity's reputation is "worse than it deserves".

Finally, two thirds of institutional investors said their in-house investment staff are more likely to "jump ship" to another firm than they were five years ago.

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