Hedge funds’ appetite for domestic stocks rising: Indian market among hottest bets
NEW DELHI: India was not among the top geographies where hedge funds would go and invest in 2016.
But this year is different. A survey by Credit Suisse among 320 institutional investors – who hold $1.03 trillion of total $3.01 trillion assets that the hedge fund industry manages –suggests India is the third most popular principle geography and top specialised geography for hedge funds this year.
The report suggested that this year investors are focused on emerging markets (EM) exposure, including some Asia-Pacific markets and India.
The overall Asia-Pacific region drew the maximum interest at 24 per cent net demand, down from the last two years, but enough to top the 2017 list, it noted.
India has seen a rise in net demand to 19 per cent this year from 16 per cent last year. Greater China, which includes mainland China, Hong Kong, Macau and Taiwan, has seen a drop 4 per cent at 9 per cent compared with 13 per cent last year.
“Emerging markets strategies saw the biggest increase from last year, as investors look for potentially undervalued markets abroad. This was also true for strategies focussed on regions like Latin America and specific countries such as India,” Credit Suisse said, adding that demand for “Greater China and Japan dropped by 4 per cent each, but given the elevated levels of demand last year, both remained net positive for this year as well”
Investors remain optimistic on their 2017 target returns for hedge funds, which stand at 7.25 per cent, even as 70 per cent of the respondents said their allocations towards hedge funds did not meet expectations in 2016.
Crowded trades and lack of market liquidity are seen as significant potential risks to the hedge fund industry, but this year, political uncertainty also rose to round out the top three concerns at the top of investors’ minds, Credit Suisse noted
“Investors are also wary of the potential impact of central bank actions around the world, as global monetary policy remains in the spotlight and top of mind for many allocators,” it said.
But this year is different. A survey by Credit Suisse among 320 institutional investors – who hold $1.03 trillion of total $3.01 trillion assets that the hedge fund industry manages –suggests India is the third most popular principle geography and top specialised geography for hedge funds this year.
The report suggested that this year investors are focused on emerging markets (EM) exposure, including some Asia-Pacific markets and India.
The overall Asia-Pacific region drew the maximum interest at 24 per cent net demand, down from the last two years, but enough to top the 2017 list, it noted.
India has seen a rise in net demand to 19 per cent this year from 16 per cent last year. Greater China, which includes mainland China, Hong Kong, Macau and Taiwan, has seen a drop 4 per cent at 9 per cent compared with 13 per cent last year.
“Emerging markets strategies saw the biggest increase from last year, as investors look for potentially undervalued markets abroad. This was also true for strategies focussed on regions like Latin America and specific countries such as India,” Credit Suisse said, adding that demand for “Greater China and Japan dropped by 4 per cent each, but given the elevated levels of demand last year, both remained net positive for this year as well”
Investors remain optimistic on their 2017 target returns for hedge funds, which stand at 7.25 per cent, even as 70 per cent of the respondents said their allocations towards hedge funds did not meet expectations in 2016.
Crowded trades and lack of market liquidity are seen as significant potential risks to the hedge fund industry, but this year, political uncertainty also rose to round out the top three concerns at the top of investors’ minds, Credit Suisse noted
“Investors are also wary of the potential impact of central bank actions around the world, as global monetary policy remains in the spotlight and top of mind for many allocators,” it said.
