BNP Paribas publishes a survey on alternative investment “Hedge Fund Booster”

BNP Paribas publishes the results of its 2022 alternative investment survey: “The Hedge Fund Booster”

Investors are looking for low beta strategies to hedge against rising inflation

The multi-strategy strategy is expected to be the best performer with the second highest net inflows in 2022

New York, London, Hong Kong – March 2, 2022 – BNP Paribas, Europe’s leading global bank, and its Prime Services business today published its 2022 alternative investment survey: “The Hedge Fund Booster.“BNP Paribas’ Capital Introduction team surveyed 224 grantees in December 2021, who are investing or advising on $1.2 trillion in hedge fund assets. This represents around a third of the sector’s assets under management. The report provides insights to better understand investor sentiment regarding performance and asset allocation plans for hedge funds and other alternative investments.

Ashley Wilson, Global Head of Prime Services at BNP Paribas,said: “The outlook for hedge funds for 2022 is optimistic, with the average allocator in our survey looking to add nearly a quarter of a billion dollars to hedge funds. At BNP Paribas, we have built a world-class multi-asset prime services platform that is well positioned to support this growth and achieve our ambition to become Europe’s largest Prime Broker for global hedge funds. We are pleased to present these findings and grateful to all participating investors, customers and colleagues for their continued support.

Marlin Naidoo, Global Head of Capital Introduction at BNP Paribas, said: “With rising rates and geopolitical uncertainty, our report shows that investors are increasing their allocations to low-beta hedge funds that can achieve high single-digit returns. The strong net asset inflows we expect in 2022 will be met with some volatility as investors reallocate capital from traditional long-term funds to hedge funds, shift some capital from hedge funds to private markets and make capital rotation within the hedge fund space. . We would like to thank our Global Investor Relations for taking the time to participate in this survey and providing us with this invaluable information. »

This is the first survey since the finalization of the transfer of Global Prime Finance and Electronic Equities activities from Deutsche Bank to BNP Paribas. The migration of customers, technology and around 900 key employees worldwide was successfully completed at the end of 2021. This platform, together with the acquisition of Exane and the benchmark agreement to ensure the continuity of service to clients of Credit Suisse’s Prime Services and Derivatives Clearing businesses, allow BNP Paribas to offer its clients around the world a solid alternative to US banks in Prime services and global equities.

Key findings from BNPP’s alternative investment survey:

The Hedge Fund Booster

The hedge fund outlook for 2022 is optimistic as investors seek to inject an extra dose of capital into low-beta strategies to hedge against rising inflation.

More than half of investors surveyed plan to grow their hedge fund portfolio in 2022, with the average respondent looking to increase exposure to hedge funds by US$244 million at the expense of long-only funds in equities, credit and fixed income securities.

Investors are expected to have met their return target for their hedge fund portfolio last year (average target of 8.32%), with 62% of respondents having already met it by end-November 2021, of which 29% have outmoded.

The rise of the e-investor: dispatchers adapt to the pandemic

Three out of five respondents have performed virtually all due diligence for previously unknown managers since the start of the pandemic.

· Three-quarters of survey participants made new allocations to previously known managers by doing virtual due diligence.

It’s all about the multi-strat

Multi-strategy is expected to be the best performing strategy in 2022 after being the second best last year, falling short of event-driven.

· Multi-strategies should record the second highest net inflows this year, after specialized long/short equity funds.

The return of quants

· Quantitative equities and quantitative multi-strategies are expected to make a comeback with more than one in ten investors looking to enrich the space.

· These strategies outperformed the broader hedge fund industry last year after underperforming the previous three years.

The dawn of Eurasia

Asia-Pacific and Europe are the most searched regions for 2022.

· Investors are looking to increase their exposure to long/short equity funds in these two regions and have also expressed interest in expanding their exposure to European credit.

Intermediaries are driving the growth of personalization

· 45% of investors have personalized mandates with managers compared to 31% two years ago.

· Investment consultants report customizing more than half of their hedge fund assets and expect that figure to grow to two-thirds in the next five years. For funds of funds, this currently represents around a third and is expected to reach almost half of their allocations by 2027.

The crypto creep

23% of investors surveyed are investing in cryptocurrency strategies, with 15% expecting to increase their investment in 2022 and another 29% who are not currently investing are looking to do so.

Investors are still gathering research and focusing on understanding the opportunities for generating alpha versus beta crypto, how best to position themselves in their portfolio, and the correct fee structure.

Green dollar strengthens as investors continue to drive ESG agenda

A third of investors surveyed say they invest in ESG-dedicated strategies, with a fifth of investors planning to increase this figure in 2022. 23% of investors are considering an additional investment.

· Diversity and inclusion remains an area of ​​focus, with 38% of respondents saying they invest in female and minority-owned managers, up from 21% five years ago. 18% of respondents expect growth in 2022, while 20% of respondents plan to invest for the first time.

About BNP Paribas

BNP Paribas is the leading bank in the European Union and a major player in international banking. It is present in 68 countries and has more than 193,000 employees, including nearly 148,000 in Europe. The Group has key positions in its three main areas of activity: Retail Banking for the Group’s retail banking networks and several specialized businesses including BNP Paribas Personal Finance and Arval; Investment & Protection Services for savings, investment and protection solutions; and Corporate & Institutional Banking, focused on corporate and institutional clients. With its diversified and integrated model, the Group supports all of its clients (individuals, local authorities, entrepreneurs, SMEs, companies and institutions) in carrying out their projects through financing, investment and savings solutions. and foresight. In Europe, BNP Paribas has four home markets: Belgium, France, Italy and Luxembourg. The Group is deploying its integrated retail banking model in several Mediterranean countries, in Turkey, in Eastern Europe and through a large network in the western United States. A key player in international banking, the Group has leading platforms and businesses in Europe, a strong presence in the Americas and solid and fast-growing business in Asia-Pacific.

BNP Paribas has implemented a Corporate Social Responsibility approach in all its activities, enabling it to contribute to building a sustainable future, while ensuring the Group’s performance and stability.

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