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Preqin Investor Outlook: Alternative Assets H1 2014

Standing in the beginning of the year 2014, institutional investors and decision makers are probably trying their best to predict the further growth in fundraising for alternative assets funds in 2014.Preqin Investor Outlook: Alternative Assets, H1 2014, which provides a unique insight into institutional investors in private equity, hedge funds, real estate and infrastructure. This report examines the investment plans and views of more than 430 investors in alternative assets, compiled from a series of interviews carried out by Preqin’s analysts in December 2013.

The report also examines results across all asset classes to provide a comprehensive overview of investors’ plans for the next 12 months and their activity over the previous year, exploring changes to allocations, fund searches and investors’ views on the key issues impacting their alternatives portfolios. It gives us some very positive figures in terms of industry perceptions and satisfaction with returns, investor activity, as well as key issues and regulations.

In the “Industry Perceptions and Satisfaction with Returns” section, the report says that “hedge funds posted double digit returns for the second year in a row in 2013 and a considerable 21% of hedge fund investors stated that their investments had exceeded expectations, with 13%, 14% and 15% of private equity, real estate and infrastructure investors respectively also stating this.” And meanwhile, “with a large proportion of investors remaining satisfied with their investments in each asset class and perceiving the industry positively, it is likely that many will look to allocate further capital to alternative assets funds in 2014.” See the figure below.

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In addition, by stating that “there is likely to be further growth in fundraising for alternative assets funds in 2014”, Preqin report explains its readers in details: “in particular, the private equity and hedge fund asset classes may see strong fundraising, with 36% and 32% of investors in each asset class respectively looking to commit more capital in the next 12 months than in the previous year. Real assets fundraising may not see as large an increase, with 24% of real estate investors expecting to commit less capital in 2014 than in 2013, and 31% of investors in infrastructure looking to put less capital to work, although a similar proportion do anticipate investing more in 2014 than in 2013.” And the three key concerns of investors by asset class is well presented in a table below.

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Furthermore, in the “Key Issue and Regulations” section, Preqin report states that the deadline for existing fund managers to fully comply with the Alternative Investment Fund Managers Directive (AIFMD) looms closer and the effect that regulation has on the private equity industry has become a hot topic for discussion. In our previous post “AIFMD: re-shaping for the future“, we’ve brought readers’ attention to the Alternative Investment Fund Managers Directive (AIFMD). According to Preqin, the scope of the AIFMD is broad and, with a few exceptions, covers the management, administration and marketing of alternative investment funds. The Directive will come into full effect in July 2014 and, although there may be a last-minute rush to comply, fi rms are by and large expected to be compliant by then.

As a matter of fact, the investment environment and investors’ evaluations for 2014 are not bad at all. To read more details about Preqin’s analysis, please visit here.

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