By Nell Mackenzie
London (Reuters) – Half of the global investors surveyed by the main brokerage department of Bank of America intends to allocate more money to prefix funds this year, while 37% want no change.
The results represented a 2% increase in those who wanted to spend more on hedge funds from early 2024, according to a bank report for clients on Friday.
The survey of responses was received from 256 companies overseeing a combined sum of over $ 1 trillion invested in hedge funds.
Investors who would give up their hedge fund payments and take their money back thinned to 7% from 12% in 2023, said BofA's 2025 Preview Preview report.
Dissatisfied investors thought earnings should have been better, the bank said. Of those who were unhappy, 73% said underperformance was their reason for wanting to redeem money.
Other reasons that investors were unhappy were when the hedge funds changed their investment strategy and when hedge funds simplified, or combined their portfolio, the survey said.
Allocators have also been concerned that their hungry funds are stacking into overcrowded trade posts where everyone has the same idea, the report said. Overcrowded sites can grow costly if speculators rush for the exit at the same time.
Prevaling funds that grow too large to invest elaborately without its crafts moving the market were also a major concern that had increased since last year, the report said.
About the same investors as last year were worried that hedge funds said they specialized in one kind of investment actually made money by doing something else, or so -called style drift.
Talent was also named as an ongoing concern.
Smaller hedge funds ran below $ 500 million in fifth assets were less likely to see their investors leave.
Family offices, pension and endowment schemes and foundations were most likely to remove all their money from the table, rather than in part, the report said.
In 2025, investors are most interested in stock and bond trades and less in systematic trends and funds that play on macroeconomic events.
The clients were more successful in bargaining down on fees compared to this time last year.
About 60% of investors earned fee reductions compared to about half last year, and there was a slight increase to 22% from 17% which had more favorable liquidity terms, allowing them to buy and sell out of their hedge fund investments with less delay .
(Reported by Nell Mackenzie; Edited by Dhara Ranasinghe and David Evans)