Global hedge fund assets may touch $2 trillion by year end

Global hedge fund assets are likely to return to their pre-crisis peak of nearly $2 trillion by the end of the year, led by increased investments in Asia-Pacific focused schemes, a survey by financial services firm Credit Suisse said.

According to the annual Hedge Fund Investor Survey, amid the rising optimism about the growth of hedge fund industry, assets are forecast to rise by 25 per cent this year.

"Hedge fund investors estimate that the industry will grow from an estimated $1.64 trillion at the end of 2009 to $1.97 trillion by the end of the year, which is above the pre-crisis peak and almost identical to the year-end forecast from managers," the survey stated.

The leader by geographic focus is Asia-Pacific focused strategies, with 61 per cent of investors increasing allocations, the survey revealed.

"Appetite for Asia-Pacific is a clear illustration of the strong recovery in investors' risk appetites and search for returns, as investors had actually planned net decreases to Asia-Pac at this time last year," Credit Suisse managing director (London) Edgar Senior said.

"This reversal was confirmed by the record attendance at our Hong Kong Hedge Fund forum recently, where sentiment was dramatically more positive than in March 2009," Senior said.

Hedge funds refer to investment funds that can take both long and short-term positions, use arbitrage, buy and sell undervalued securities, trade options or bonds and invest in almost any opportunity in any market where it foresees impressive gains at reduced risk.