Preqin interviewed 150 fund managers and 100 institutional investors in June 2014 to ascertain their outlook on the hedge fund industry as we entered the second half of the year. When asked to predict the end of year benchmark value in 2014, 99% of hedge fund managers predicted the All Hedge Funds benchmark would be 11% or less, below the 11.69% hedge funds returned in 2013.

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  • 53% of fund managers and 51% of hedge fund investors believe the 2014 benchmark will fall between 4-6%.
  • As of June 30th 2014, the Preqin All Hedge Fund benchmark has posted net returns of 3.68%.
  • The bulk of this performance was added in Q2 2014, with the benchmark making gains of 2.33% in the second quarter of the year, versus net returns of 1.32% in Q1.
  • Investors are more positive on the outlook for the benchmark than fund managers; 10% of investors believe the industry will make gains of 10% or more in 2014, versus 7% of fund managers.
  • North American managers are predicting the benchmark to perform better in 2014 than their European and Asia & Rest of World counterparts; the mean benchmark return predicted by these managers is 6.06% versus 5.33% (Europe) and 5.89% (Asia & Rest of World).
  • In December 2013, 73% of fund managers stated that they had a positive outlook for the year ahead. In June 2014, 57% of fund managers stated the same thing for their H2 2014 outlook.
  • Overcoming poor performance was among the top three key challenges for H2 2014 cited by all fund managers across the globe. In Asia & Rest of World this was the leading challenge, cited by 28% of fund managers in the region.
  • In Europe and North America regulation and a challenging fundraising environment pose more of a challenge. In Europe, 38% of fund managers reported regulation as the key challenge in the industry and a quarter of North America-based fund managers said the same about fundraising.

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