Investors are predicting over USD200 billion net inflows into the hedge fund industry in 2011, taking the total AUM to an all time high of USD2.2 trillion, according to Deutsche Bank's ninth annual Alternative Investment Survey.

The survey of investors representing more than USD1.3 tillion in hedge fund assets including public and private pensions, foundations and endowments, sovereign wealth funds, funds of funds, private banks, investment consultants and family offices, also found that institutional investors are increasing their allocations and the size of their hedge fund teams, which indicates significant future growth.

According to the survey, equity long/short, event-driven and global macro are predicted to be the best performing strategies, while the US is predicted to be the best performing region, followed by emerging markets and Latin America. While performance is still the most important factor when assessing a hedge fund manager, this year, 43% of investors cite access to the portfolio manager as a priority factor, above manager pedigree.

“Despite a challenging market environment over the past year, the hedge fund industry continues to trend upward, with investors predicting a fourfold increase in inflows into the industry in 2011,” says Barry Bausano (pictured), Co-Head of Global Prime Finance and Head of Equities in North America.

“Investors’ responses indicate a sustained, strong recovery,” says Jonathan Hitchon, Co-Head of Global Prime Finance. “Bullish sentiment on equities, flows, and industry dynamics were the clear messages conveyed by the respondents to our survey.”  

"Hedge funds now hold a widely accepted role within the overall asset management industry,” said Anita Nemes, Global Head of Capital Introduction. “More than 50% of investors have increased their hedge fund assets under management last year, further cementing the industry’s place in the mainstream.”