Hedge funds seen taking in $210b in 2011: Survey

Hedge funds around the world are expected to attract USD 210 billion in new money this year, according to a survey by Deutsche Bank released on Monday, helping to set a fresh record for assets.

The increase of new money -- roughly four times the amount added last year -- plus performance is expected to increase industry assets to USD 2.25 trillion by year's end, data from the bank's ninth annual alternative investment survey shows.

Hedge Fund Research, a Chicago-based performance and asset tracking group, said the loosely regulated industry oversaw USD 1.92 trillion in assets at the end of 2010.

Hedge fund assets reached an all-time high of USD 1.93 trillion in 2008 before the financial crisis took hold.

Deutsche Bank in January polled 528 investors who collectively oversee USD 1.3 trillion for the survey.

Fresh interest in hedge funds comes at a time pension funds and other large investors are trying to boost their returns but it also comes as the industry faces fresh scrutiny due to the US government's wide-ranging, high-profile insider trading probe.

The bulk of the new money is expected to come from institutional investors, the bank wrote, noting that 83% of sovereign wealth funds and 83% of pension funds raised their allocations to hedge funds last year.

These types of investors are readying themselves for new investments by beefing up their own teams while also turning more to consultants for help in selecting managers.

While tastes for hedge funds has historically favoured the industry's biggest players, the bank's survey found that investors are now ready to give smaller players a try with 65% of the investors, saying they expect to put money with funds that have less USD 1 billion in assets.