Hedge fund assets may climb 14% this year as proposed regulations ease the concerns of risk-averse investors, according to Eurekahedge Pte.
Assets may reach $1.68 trillion, compared with about $1.48 trillion in 2009 when managers posted their best annual performance in six years, according to the Singapore industry researcher.
Hedge funds recovered from their record losses in 2008, returning an average 19% last year, as stimulus packages by governments around the world helped stock and bond markets rebound. The industry's assets fell for the first time in eight months in January, losing $2.85 billion as stock and commodity prices fell, Eurekahedge said in a report.
"We can expect greater allocations to hedge funds throughout the year," Eurekahedge said. "The sharp change in market conditions in the middle of January has resulted in greater risk aversion and as such, investors are seeking greater downturn protection, which hedge funds have traditionally provided in addition to greater returns over the long term."
Eurekahedge's figures are estimates based on about 80% of funds that have so far disclosed performance to the researcher.