Demand for liquid alternative investments has increased significantly since the 2008 financial crisis, according to From Alternatives to Mainstream, a study released by Deutsche Bank.
The research, which was conducted among 212 hedge fund investors with a combined AUM of $804bn (€621bn), revealed that demand for liquid alternatives increased from 28% to 51% YoY.
According to Deutsche Bank, liquid alternatives have seen a compound annual growth rate of 40% since 2008 and net inflows are set to grow by a further 44% over the next 12 months.
Responding to growing demand, hedge fund managers are increasingly looking to expand their product range in alternatives, with the share of responding managers offering liquid alternatives increasing from 27% last year to 42 % this year.
Anita Nemes, Global Head of Capital Introduction at Deutsche Bank, comments on the results: “Liquid alternatives are the fastest growing segment of the asset management industry. This presents a significant opportunity for investors to access better risk-adjusted returns, and also for hedge fund managers who are increasingly becoming solution providers to their investors.”
The study also revealed that fundamental equity long/short has turned out to be the most popular strategy among investors allocating to alternative Ucits and 40 act mutual funds.
The shift towards liquid alternatives has been most pronounced among larger managers, two thirds of managers with an AUM exceeding $5bn are managing such products for more than three years.