Press Release: AIMA Hedge Fund Confidence Index Q1 2021
Published: 12 April 2021
OVER 90% OF GLOBAL HEDGE FUNDS ARE POSITIVE ABOUT ECONOMIC PROSPECTS FOR NEXT 12 MONTHS
12th April 2021, London: The AIMA Hedge Fund Confidence Index (HFCI) is a new global index which measures the level of confidence that hedge funds have in the economic prospects of their business over the next 12 months.
AIMA today announces that according to the March 2021 HFCI, over 90% of participants cited a positive confidence measure when asked to choose from a range of -50 to +50, where +50 indicates the highest possible level of economic confidence for the firm over the next 12-month period and -50 indicates the lowest level of economic confidence for the firm over the same period.
A product of AIMA, Simmons & Simmons and Seward & Kissel, the HFCI is calculated at a specified point in time with the index published at the start of each quarter. Over 300 hedge funds participated in the Index, accounting for approximately $1 trillion in assets.
Breakdown of responses:
- The overall average measure of confidence is +18, a near 40% increase on the confidence level reported last quarter (December 2020) where there was a wide dispersion of confidence scores.
- 54% of responses came from larger funds (those that manage over $1billion in assets) while smaller funds (those that manage fewer than $1 billion) accounted for 46% of responses.
- Both large and small hedge funds express high levels of confidence, with large funds being most confident, on average scoring a rating of +19 compared to smaller hedge funds scoring a confidence rating of +17.
- Overall, hedge funds based in North America expressed the highest level of confidence (+20) whereas EMEA and APAC based funds confidence levels increased by 70% and 58% from Q4 2020.
- Hedge funds in the UK also expressed markedly higher confidence levels this quarter, up 60% on Q4 2020 to +16.
- Among the funds that reported to the HFCI this quarter, long/short equity, event driven funds, CTA and Managed Futures score the highest on confidence.
Tom Kehoe, Global Head of Research and Communications at the Alternative Investment Management Association (AIMA) commented: “As we move into the second quarter of this year, hedge funds enjoy a healthy level of confidence with the promise of greater times ahead. Further reasons for the industry to be cheerful include a continued strong appetite among investors for hedge funds while the pipeline for new fund launches remains resilient.”
Devarshi Saksena, Partner - Simmons & Simmons commented “The trends in the Index show growing optimism amongst hedge fund managers as we emerge from lockdown. This chimes with what we are observing at Simmons & Simmons in terms of enhanced new hedge fund launch activity and increased inflows into existing hedge fund products. The pipeline for new fund launches looks to be resilient as we move further into 2021.”
Steve Nadel, Partner - Seward & Kissel added “The increase in confidence for hedge fund managers from Q4 2020 to Q1 2021 is significant but not surprising given the transition in power with the new US administration and what is perceived to be a more predictable administration. Additionally, scale of vaccine distribution has been promising and leads us to believe that we are one step closer to a return to normalcy.”
Notes to Editors.
Selecting the appropriate level of confidence, respondents are asked to choose from a range of -50 to +50, where +50 indicates the highest possible level of economic confidence for the firm over the next 12 month period and -50 indicates the lowest level of economic confidence for the firm over the same period. An index level of zero (0) indicates a neutral level of confidence. When considering how best to measure their level of economic confidence, hedge fund respondents are asked to consider the following factors: their firm’s ability to raise capital, their firm’s ability to generate revenue and manage costs, and the overall performance of their fund.
Please contact Hume Brophy, [email protected] +44 (0) 7772124299
AIMA is the global representative of the alternative investment industry with around 2,000 corporate members in over 60 countries. AIMA’s fund manager members collectively manage more than $2 trillion in hedge fund and private credit assets. AIMA draws upon the expertise and diversity of its membership to provide leadership in industry initiatives such as advocacy, policy and regulatory engagement, educational programmes, and sound practice guides. AIMA works to raise media and public awareness of the value of the industry. AIMA set up the Alternative Credit Council (ACC) to help firms focused on the private credit and direct lending space. AIMA is committed to developing skills and education standards and is a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) – the first and only specialised educational standard for alternative investment specialists. AIMA is governed by its Council (Board of Directors). For further information, please visit AIMA’s website, www.aima.org.
About Simmons & Simmons:
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We focus on four highly regulated sectors (asset management and investment funds, financial institutions, healthcare and life sciences and technology, media, and telecommunications) – using our specialist skills to understand your business, and the forces at play around it. All grounded in exceptional knowledge of the legal detail. This is how we consistently deliver smarter, more efficient ways to tackle our clients’ most complex challenges. www.simmons-simmons.com
About Seward & Kissel:
Seward & Kissel is home to one of the largest and most recognized hedge fund practices in the world, having formed what is considered to be the very first hedge fund, A.W. Jones & Company, in 1949. Our clients represent many of the largest hedge fund managers, based on gross fund assets managed, in the industry, as well as start-up and emerging managers. Our experience providing services to hedge funds extends beyond legal counsel – drawing on our extensive experience and industry network, we help our clients achieve practical solutions within a complex legal and regulatory framework. We have worked with advisors, managers, and institutional investors globally.
Our hedge fund clients utilize a wide range of investment strategies, including but not limited to long-short equity, credit and distressed, quantitative, macro, activist, fund of funds, industry-specific, commodities event-driven, multi-strategy, and structured products. www.sewkis.com