There is an improvement in sentiment across hedge funds since 2022-end albeit trending slightly below the historical averages, according to a survey from the Alternative Investment Management Association (AIMA).
Based on a sample of 272 hedge funds (accounting for approx. US$1.9 trillion in assets) that participated in the industry poll taken throughout the week ending 31 March 2023, the average measure of confidence (in the economic prospects of their business over the coming 12 months) is +16.3.
On a regional basis, the UK remains the standout in terms of consistently high confidence relative to other comparable peers. The UK’s pool of respondents is dominated by relatively large long-short equity, global macro and multi-strategy funds all of which were among the most confident strategies.
EMEA (excl. UK) was notable for being extremely overweight fund managers based in the Middle East. Taken alone, Middle Eastern fund managers reported an average confidence score of +22.6. Similar to the UK, these fund managers are most likely to be larger and follow long-short equity of global macro strategies. It also had 100% of respondents reporting a positive sentiment score.
APAC’s confidence score is dragged down by half of the population of respondents being smaller managers, along with some extreme scores reported across the region from global macro managers, fund of funds, long-short equity – that all reported an average score around -20. The average AUM of APAC-based managers ($3.7 billion) is dwarfed by UK and Middle Eastern respondents – $8.7 billion and $8.2 billion, respectively – underscoring the notion that confidence might primarily be a function of size more than other factors.
Tom Kehoe, global head of Research and Communications at AIMA, said in the report: “Despite the March madness that beset global financial markets, hedge funds remain cautiously optimistic, with the current environment also presenting investment opportunities. Further reasons for optimism include increased hedge fund appetite among investors looking to best preserve their savings while the pipeline for new fund launches is slowly picking up.”