Credit Suisse 2013 Investor Survey Report

1. Reaching New Heights
The 2013 Credit Suisse Global Survey of
Hedge Fund Investor Appetite and Activity
Copyright © 2013 Credit Suisse Group. All rights reserved.

2. Credit Suisse
Credit Suisse AG is one of the world's leading financial services providers and is part of the Credit Suisse group of
companies (referred to here as 'Credit Suisse'). As an integrated bank, Credit Suisse offers clients its combined
expertise in the areas of private banking, investment banking and asset management. Credit Suisse provides advisory
services, comprehensive solutions and innovative products to companies, institutional clients and high-net-worth private
clients globally, as well as to retail clients in Switzerland. Credit Suisse is headquartered in Zurich and operates in over
50 countries worldwide. The group employs approximately 49,700 people.
Credit Suisse Prime Services
Credit Suisse Prime Services delivers outstanding core financing and operating services that hedge fund and institutional
clients require, including start-up services, product access, high-touch client service, financing, access to sources of
capital, risk management, and managed lending. Prime Services delivers the strengths of Credit Suisse's investment
banking, private banking and asset management business to a focused number of clients. As a partner, Prime Services
is committed to bridging the gap between idea and execution and ultimately functioning as the provider of choice for both
the alternative and traditional investment communities.
Credit Suisse Capital Services
Credit Suisse Capital Services is 30 person team with professionals located in New York, Philadelphia, San Francisco,
Boston, London, Zurich, Geneva, Dubai, Hong Kong and Tokyo, responsible for maximising sustainable flow of capital
between hedge fund managers and a broad range of institutional investors (including Funds of Hedge Funds, Family
Offices, Private Banks, Endowments and Foundations, and Public and Corporate Pensions) who are seeking to allocate
capital to Hedge Funds. It is critical to our success that we treat both managers and investors as “clients”, and we strive
to be of equal utility to both communities, providing them with regular insight and research, as well as frequent
opportunities to interact with each other. Credit Suisse was the first firm to combine into a single team the 3 services
that managers and investors use to connect with each other – Capital Introductions for Prime Services clients seeking to
diversify and upgrade their capital base, a Placement Agent for established managers seeking to accelerate their growth
strategy and Capital Solutions in cooperation with our market-leading Fund-Linked Products Group.
For more information on this survey or on our Prime Services business generally, please contact:
Prime Services Capital Services
Americas + 1 212 325 3116 + 1 212 325 3156
Europe + 44 (0)20 7888 8165 + 44 (0)20 7888 1212
Asia + 852 2101 7287 + 852 2101 7471
Confidential
Page 2 of 90

3. Table of Contents
PART 1 – COMMENTARY AND KEY FINDINGS 4
Investors at a Glance: Selected Highlights 5
Introduction 7
I. Where Investors’ Assets Are Likely to Flow in 2013 8
Current Investor Sentiment towards the Hedge Fund Industry
Where Investors’ Assets Are Likely to Flow in 2013 – By Strategy
Where Investors’ Assets Are Likely to Flow in 2013 – By Region
Where Investors’ Assets Are Likely to Flow in 2013 – By Size
II. Return Expectations for 2013 14
III. Update on Key Industry Trends and Developments 16
Sources of Risk to the Hedge Fund Industry in 2013
Appetite for Start-ups
Interest in other formats for investing into Hedge Funds
Fee structures
Most Interesting Developments in 2013
IV. Focus on Pensions and Institutions 23
Pensions and Institutions are Leading Flows to Hedge Funds
Investment Expectations
Selection Process and Due Diligence
Hedge Funds in the Portfolio
Outside of Traditional Hedge Funds
PART 2 – DATA APPENDICES 33
Appendix I – The Participants
Appendix II – Key Industry Trends and Forecasts
Appendix III – Focus on Pension and Insurance Activity
Appendix IV – Alternative Routes to Absolute Return
Appendix V – Strategy Appetite
Confidential
Page 3 of 90

4. PART 1 – COMMENTARY AND KEY FINDINGS
Confidential
Page 4 of 90

5. Investors at a Glance: Selected Highlights
The Participants
 Size: Close to 550 institutional investors participated, representing $1.03 trillion in collective Single-Manager Hedge
Funds (SMHF) allocations.
 Type: The investor base was well diversified and included 25% institutional fund of Hedge Funds (FoHFs), 20%
Family Offices, 12% Advisor/consultants, 12% Pension Funds/Insurance companies and 6% Endowments.
 Regions: Participation was globally representative, with 42% of total respondents headquartered in the Americas,
39% in Europe, Middle East and Africa (EMEA) and 19% in Asia.
Key Industry Trends and Forecasts
 Asset Flow Forecasts: On average, investors expect the industry to grow 10% in 2013, to reach $2.42 trillion in
total assets, with the upper quartile prediction at $2.50 trillion.
 Market Return Predictions: Markets are predicted to return between 2.9% and 10.4% on average this year, with
investors most optimistic about Equity markets across regions, predicting returns of between 7.3% and 10.4%.
 Strategy Return Predictions: Long/Short Equity is predicted to be the top performing strategy this year by 34% of
investors, with Emerging Markets Equities and Structured Credit behind as numbers two and three respectively.
 Risks: Investors consider crowded trades/herd behaviour and regulatory changes to be the top two sources of risk to
the industry.
 Start-up Appetite: There remains a healthy appetite for start-ups, with 69% theoretically able to invest on day one,
however, with an increasing demand for fee discounts or equity share.
 Hurdle Rates: 77% of investors prefer managers to have a hurdle rate, with the majority indifferent to the type of
hurdle rate (40%).
Focus on Pension and Insurance Activity
 Objectives: In addition to high-risk adjusted returns, diversified/uncorrelated returns versus equity markets were the
notable key objectives that pension funds particularly looked for in their hedge fund investments.
 Selection and Due Diligence: 73% of institutions require hedge fund assets to be greater than $250 million
before they can invest and 80% take at least 4 months to 1 year to complete due diligence on funds.
 Terms: Almost half of pension funds and insurance companies always negotiate performance and management fees.
 Asset class buckets: 79% of pensions allocate to Hedge Funds through a dedicated hedge fund/alternatives
bucket, with 50% integrating both Equities and Fixed Income Hedge Funds into the traditional asset class bucket.
 Turnover: Hedge Fund turnover for pensions, at 8%, is lower than the average of other investors, at 10%.
Alternative Routes to Absolute Return
 UCITS/Regulated Funds: 21% of investors plan to increase their allocations this year, up from 20% last year, with
the majority of these coming from Retail Intermediaries in EMEA.
 Managed Accounts: Appetite decreased slightly to 35% from 40% last year, distributed evenly across investor
types and regions.
 Alternative Routes: For other alternative formats, such as closed-ended Hedge Funds, replication products and US
40 Act funds, over 70% of investors have no allocations or plans to allocate, however 27% are looking to allocate to
Long-only funds offered by Hedge Fund managers.
Strategy Appetite
 Overall: Long/Short Equity (General) is the most sought-after strategy, with Emerging Markets Equities ranking
second and Event-Driven close behind.
Confidential
Page 5 of 90

6.  Equity Strategies: Net demand for Long/Short Equity (General) has increased by 24% from last year, while
appetite for trading oriented Long/Short fell by 11% from last year.
 Fixed Income/Derivative Strategies: Fixed Income strategies in general decreased in net demand, with Fixed
Income Arbitrage/Relative Value decreasing by 16% and Credit (RV and Leverage Loans/High-Yield) by 11%.
 Other Strategies: Net demand for CTA/Managed Futures along with Global Macro fell by 30%.
 By Geographic Focus: Net demand across geographies increased on average, with Developed Europe increasing
by 26% from -2% net demand last year to +24% this year. Emerging Markets and Asia-Pacific remain in the top
two geographies for preference, while North America saw net demand fall to 14%.
Confidential
Page 6 of 90

7. Introduction
As we emerge from a year in which the hedge fund industry experienced relatively low levels of net inflows, investors are
approaching 2013 with a good deal of optimism and purpose. Expectations for growth are strong, with a consensus of
our survey respondents forecasting the hedge fund industry to grow by over 10% this year. This would equate to an
additional $220B for the industry during 2013, with overall assets reaching a projected all time high of $2.42T by year
end, with the upper range of our forecast reaching as high as $2.5T.
Investors were also optimistic about the potential for higher hedge fund returns in 2013, with a forecast of 6.9% average
annual return for the industry versus a forecast of 5.4% at this same time last year. Perhaps there is greater confidence
in central bankers and their ability to avoid deflationary scenarios while keeping rates, equity volatility and correlations at
moderate levels. Given this backdrop and positive performance in 2012, it is not surprising to see increased expectations
for 2013.
We observed some dramatic changes in this year's survey results with respect to investor appetite, both by strategy and
region. Perhaps the most dramatic being the rebound in investor appetite for equity long/short strategies, which was
ranked as the top strategy of interest by investors. Long/Short Equity had the biggest year-on-year “swing” of any one
strategy. Emerging Markets Equity and Event-Driven strategies were also ranked very highly by investors this year.
From a regional standpoint, there was a similarly pronounced increase in interest for strategies covering Developed
Europe. Investors appear to have had some of their confidence restored for now by political action taken, though they
continue to closely monitor the situation. Emerging Markets and Asia-Pacific now hold the top two spots in the survey
as risk appetite clearly seems to be on the mend.
Interest in new and emerging managers continues to remain strong, though more investors this year indicated that they
expect to receive some level of fee discount for being an early-stage investor. This corresponds with the rise of
founders’ share classes, which typically offer investors a discounted fee arrangement. The bar remains high for investors,
as they apply a highly selective approach towards new funds. In addition, investors indicated that those mid-sized Hedge
Funds with assets under management between $500M and $2B continue to be of interest for potential allocations this
year.
This year, for the first time, we have broken out the results of our survey to specifically show responses from pension
funds. We believe that this fast growing investor segment is of critical importance to the future growth of the hedge fund
industry, therefore we felt compelled to share as much insight as possible. Our aim in doing so, is to shed additional
light on some of the key trends and developments within this influential investor segment.
Looking forward, many investors anticipated that crowded trades and herd mentality may pose continued risks to the
industry in addition to risk on underperformance and political uncertainty. Additionally, many predicted that there would
be further fee compression this year, as well as growth in additional formats for investing, such as long-only funds,
longer dated vehicles and US 40 Act funds.
As our title indicates, investors are forecasting that 2013 is a year in which the hedge fund industry reaches a new all-
time high with respect to assets under management. As we are now several years removed from the last financial crisis,
the climb back has been a difficult one and not without peril. We hope this survey can provide some insights into what
that path may look like going forward.
Sincerely yours,
Robert Leonard
Global Head, Credit Suisse Capital Services
Confidential
Page 7 of 90

8. I. Where Investors’ Assets Are Likely to Flow in 2013
1. Current Investor Sentiment towards the Hedge Fund Industry
Before diving into the breakdown of investor appetite and their implications for where assets are likely to flow, we wanted
to open the survey assessing the general sentiment towards the hedge fund industry and whether the prediction by many
commentators of a more bullish market outlook in 2013 is echoed within the universe of hedge fund investors.
We asked investors to forecast industry assets at the end of 2013, assuming the industry had assets of $2.2 trillion at
the end of 2012. The chart below shows the distribution of results. It indicates that even the lower quartile of predictions,
estimate a growth of 4.5%, with the average sitting at a predicted growth of over 10%. Three quarters of investors
predicted growth rates of between 4.5% and 13.6%. Investors expect this to be fairly evenly balanced between
performance and net asset flows. It is worth noting that investors’ prediction last year of 12% growth was in line with the
actual growth rate at the end of 2012 according to HFR data ($2.008 trillion at the beginning of 2012 to $2.252 trillion
at the end of 2012).
Hedge fund industry AuM forecast
2.6
2.50 Upper Quartile
2.42 Lower Quartile
10.1%
(US$ trn)
2.3 `
2.30 Average
2.2
2
31-Dec-2012 31-Dec-2013
With the many systemic risks we saw emerging in 2012, such as the many political risks in Europe and the US along
with sovereign default risks emerging across peripheral Europe, several investors looked to maintain higher than normal
levels of cash/near-cash assets. However, with real interest rates at historical lows and the continued demand for
absolute returns, we looked to investigate whether investors continued to hold high cash levels in the coming year and in
the long-term, or whether would be looking to redeploy some of this cash.
As we can see from the chart below, FoHFs ramped up their cash buffer post-crisis to an average of 12% in 2009,
which subsequently saw a steady reduction to 5% as sentiment improved in the period up to the start of 2011. This
trend reversed slightly leading up to 2012 when the average went up to 6%, however, this reversal was short-lived with
FoHFs reverting to 2011 levels of cash, which is further predicted to reduce as market conditions improve, to an average
of 3% of holdings in cash.
Allocation to cash as a percentage of FoHFs’ overall portfolios
Confidential
Page 8 of 90

9. 2.1. Where Investors’ Assets Are Likely to Flow in 2013 – by Strategy
We note in 2013 a shift in investor strategy appetite compared to 2012. The chart below ranks investors’ net demand
(percentage increasing or considering increasing minus percentage decreasing or considering decreasing) by strategy.
Rather unsurprisingly, the positive equity market sentiment which we saw in the final quarters of 2012 has yielded
considerable demand for equity related strategies for the year ahead. Long/Short Equity-General has topped this year’s
list with 35% of net demand compared with 12% in 2012 – this represents an 18 place rise year-on-year. Closely
following is Emerging Market Equity with a rise from 6th to 2nd place highlighting that investors are looking to broaden
their choice of geographies in search for greater returns. Also ranked highly this year is Event Driven Strategies.
In the fixed income space, Fixed Income Arbitrage/Relative Value has fallen to 10th place, from 3rd in 2012, whilst
Credit – ABS/Structured Credit continues to remain a strategy of interest, currently ranked 8th place.
Macroeconomic uncertainty, which has previously dictated market trends and performance, continues to remain a factor
in investor allocations but to a lesser extent. Ranked 1st in 2012, Global Macro has been divided this year into
discretionary and systematic strategies in the 2013 survey, and our results highlight significant dispersion in appetite for
the two sub-strategies. Global Macro – Discretionary is currently in 5th place with a net demand of 22% whilst Global
Macro – Systematic is at 19th place with net demand of 7%. If we are to aggregate these two strategies for year-on-
year analysis Global Macro net demand in 2013 is 15% compared with 45% in 2012.
All principal strategies, ranked by current net demand
Per the chart below we rank the largest absolute swings in net demand year-on-year. Global Macro and CTA/Managed
Futures have experienced the largest negative swings with investor appetite swaying towards Equities. Poor performance
in CTA/Managed Futures strategies on the back of lack of noticeable trends has resulted in a 30% fall in net demand
Confidential
Page 9 of 90

10. year-on-year, equal to the decline in appetite for Global Macro. The results imply that, after significant decreases in net
demand between 2011 and 2012, fundamental and valuation driven strategies are the most sought after for investors in
the year ahead. Long/Short Equity - General and Long/Short Equity - Fundamental both increased net demand year-on
-year 24% and 22% respectively. Another notable swing can be seen with Event Driven – General. After a significant
drop in net demand of 38% between 2011 and 2012, we have now seen investor confidence returning to the sector
highlighted by an 11% increase this year. Commodity Strategies continue their decline from 2012 into 2013 with a
further 15% decline in net demand.
Top ten biggest year-on-year “swings”, ranked by absolute year-on-year change in net demand
The chart below shows how strategy appetite has evolved over the last three years. One can say that whilst Global
Macro and CTA/Managed Futures has seen the most sustained net demand over previous years, 2013 brings much
more sporadic developments in strategy demand evolution. Fluctuations in net demand can be seen in all of the main
strategies with Credit – Relative Value appearing to be the most stable.
Yearly evolution of net demand across main strategies
Confidential
Page 10 of 90

11. 2.2. Where Investors’ Assets Are Likely to Flow in 2013 – by Region
In this section, we examine investor appetite by region for the year ahead. A continuation on last year’s theme sees
Emerging Markets and Asia-Pacific dominating investor net demand by region. On the back of relatively strong
performance in 2012, the return opportunities apparent in Emerging Markets continue to be vast and lucrative. Growing
dividend payouts, high saving levels and strong economic growth are all stark contrasts to the indebtedness which we
see in the developed world. In conjunction with these regions, we also see increased investor appetite for Developed
Europe with 24% net demand.
All principal geographies, ranked by current net demand
45% 42%
40%
35%
35%
30%
24% 24%
25% 22%
20%
16%
14% 14%
15% 12%
10%
10%
6%
5% 3%
0%
0%
The chart below represents the largest swings in investor net demand year-on-year with Developed Europe experiencing
the largest swing of +26%. 2012 saw managers and investors escaping the region for fear of inevitable sovereign
default and the terminal decline of the single currency. Nevertheless, political action in the latter half of 2012 appears to
have restored some confidence in the region for the time being, and austerity and structural reforms will continue for
many years to come. Consequently, investors appear to be rebalancing their portfolios with greater conviction towards
Developed Europe in 2013. Whilst the sovereign debt concerns appear muted for now, we await to see if there is an
awakening of fiscal issues later in the year.
Confidential
Page 11 of 90

12. Top ten biggest “swings”, ranked by absolute year-on-year change in net demand
A common pattern emerging over numerous years has been the solid demand for exposure in Asia-Pacific and Emerging
Markets. Emerging Market net demand has also remained relatively consistent. Asia-Pacific only experienced a +1%
increase in net demand year-on-year. We also see considerable decrease in year-on-year net demand for North America.
As risk appetite picks up, investors are willing to redirect some of their allocations to other parts of the world to meet
their risk-return desires. Lastly, the strategies implemented by the newly elected government in Japan, including a 2%
inflation target and unlimited asset purchasing, appear to have led to a more positive outlook on Japan amongst
investors, which has resulted in a 9% increase in net demand (from 7% last year to 16% this year).
The most volatile of net demands in the chart above can be seen in Developed Europe. As we have already discussed,
after a significant withdrawal from the region in 2012, we are now seeing increased intentions to allocate in 2013 which
exceed 2011 net demand levels. Even though there remains some uncertainty regarding the longer term outcome of
Europe, investors appear to see significant upside in the region, and fear of missing out on such returns poses risks to
their projected annual returns.
Yearly evolution of net demand across all regions
60% 2011 2012 2013
49%
50% 47%
42%
40%
40% 35%
34%
31% 30% 30% 30%
28%
30%
23% 24% 23% 24%
22% 21% 21%
20%
18% 18% 18%
20% 16% 16% 16%
14% 14%
12%
10% 10% 10%
10% 6% 7%
4% 3%
1% 2%0%
0%
Confidential
Page 12 of 90

13. 2.3. Where Investors’ Assets Are Likely to Flow in 2013 – by Size
The topic of the consolidation of assets with the biggest funds i.e. “the big getting bigger” has been raging on for a while
now. According to Hedge Fund Research, hedge fund firms with greater than $5 billion in assets have 57.7% of industry
assets at the beginning of 2009. Today, such funds make up 65% of industry assets.
We wanted to investigate whether this bias in flows towards funds with size was reflected in investors’ preference and
ability to invest in funds at various sizes. The results reveal a more nuanced preference for size than reports suggest.
Investors’ interest and ability rises steadily from $1-49 million to $500 million-2 billion, with $100 million representing a
turning point where the investor universe expands significantly. However, when assets expand beyond $2 billion there is
somewhat of a drop in the percentage of investors that report that AUM is irrelevant. It hints at the fact that while for
some investors, the stability that comes with scale is an advantage hence a driver of their flows, for others, size is a
factor to take into consideration depending on the funds’ strategy.
Effect of the following asset sizes on investors’ decision to invest in a fund
AuM irrelevant
>$5 billion 25% 32% 5% 6%
Potential interest
US$2-5 billion 30% 44% 23% 3%
Interest only in exceptional
US$500 million-1.99 cases
39% 54% 1%
billion No ability to allocate
6%
US$250-499 million 37% 56% 6%1%
US$100-249 million 30% 53% 14% 4%
US$50-99 million 19% 33% 31% 18%
US$1-49 million 17% 18% 34% 32%
0% 20% 40% 60% 80% 100%
Confidential
Page 13 of 90

14. II. Return Expectations for 2013
Entering 2013, we asked investors about their return expectations for a range of global markets and hedge fund
strategies. Versus a year ago, our survey shows that investors have clearly gained confidence in risk assets and are less
worried about tail risk events or macro uncertainty. For the time being, there appears to be greater confidence in central
bankers and their ability to avoid deflationary scenarios while keeping rates, equity volatility and correlations at moderate
levels. Given this backdrop and positive performance in 2012, it is perhaps not surprising to see high expectations for
Equity-based strategies in 2013. Indeed, our survey showed that return expectations for global equity markets, Europe
and Emerging Markets were all higher than the year prior.
Investors’ predictions on best performing hedge fund strategies in 2013
When asked what strategy would perform best in 2013, allocators had a clear preference for Long/Short Equity,
choosing the strategy 34% of the time - by far the most popular choice. Emerging Market Equities and Credit–
Structured strategies selected by a 16% and 11% of respondents respectively, after each produced double-digit returns
in 2012 and outperforming Long/Short Equity strategies (as measured by the Dow Jones Credit Suisse Hedge Fund
Index below) by more than 200bps. After recording 27% of the vote in last year’s survey, Global Macro strategies
generally under-performed Event Driven and Fixed Income Arbitrage strategies in 2012, but still recorded 9% of the vote
for best performing strategy in 2013 and remain an important part of investors’ portfolios.
As can be seen in the table below, Hedge Fund performance was largely positive in 2012, (as measured by the Dow
Jones Credit Suisse Broad Hedge Fund Index) with 12 out of 14 strategies producing positive returns and 6 producing
returns greater than 10%. Event Driven Distressed was the top performer, followed closely by Multi-Strategy and Fixed
Income Arbitrage strategies. Managed Futures produced negative returns for the second straight year but still
outperformed the Dedicated Short Biased funds considerably.
Hedge fund performance in 2012
Broad Index 7.67%
Convertible Arbitrage 7.82%
Dedicated Short Bias -20.39%
Emerging Markets 10.28%
Equity Market Neutral 0.85%
Event Driven 10.63%
Confidential
Page 14 of 90

15. Distressed 11.77%
Event Driven Multi-Strategy 10.14%
Risk Arbitrage 2.82%
Fixed Income Arbitrage 11.04%
Global Macro 4.58%
Long/Short Equity 8.21%
Managed Futures -2.93%
Multi-Strategy 11.19%
When asked to choose between a range of return scenarios for individual asset classes/regions, investors predicted that
Emerging Market as well as European and US equity markets would outperform all others with average expected
performance of 10.4%, 7.5% and 7.3%, respectively. The greatest expected potential for 10%-plus returns was also
seen in Emerging Markets, followed by Commodities and US Equity markets.
Investors’ predictions on market returns for 2013
With higher expectations for Equities, we have concurrently seen moderating expectations for US Credit markets.
Although 80%+ of respondents predicted that the US credit market will return between 0% and 10% (similar to last
year) 13% of respondents predicted negative performance and only 4% believed US Credit markets would return more
than 10%. Expectations for European Credit are a more varied but have certainly rebounded quickly versus the year prior
with 84% of investors predicting positive performance (versus just 52% last year) and 18% expecting double digit
returns.
Finally, return expectations appear to be more optimistic about the potential for higher hedge fund returns in 2013, with
a forecast of 6.9% average return for the industry versus a forecast of 5.4% at this same time last year." Additionally,
investors continue to believe in the ability of hedge fund allocations to protect capital with none of our respondents
expecting negative returns for the Hedge Fund asset class in 2013.
Confidential
Page 15 of 90

16. III. Update on Key Industry Trends and Developments
1. Sources of Risk to the Hedge Fund Industry in 2013
As we asked investors to look down the road in 2013 and try to assess what the biggest risks to the hedge fund industry
might be, they continue to express concern over the inability of some managers to generate uncorrelated alpha in the
current environment. As per our last two surveys, investors are convinced that crowded trades and herd mentality pose
the single biggest threat to the industry, by making it more difficult for Hedge Funds to achieve truly differentiated
performance. That said, as market correlations have declined somewhat over the past few months, 2013 may perhaps
present a better environment for managers to produce differentiated returns, especially in stock picking strategies in
general.
Investors’ views on sources of risk for the hedge fund industry over the coming year
2013 2012
Significant risk Somewhat of a risk Negligible risk Significant risk Somewhat of a risk Negligible risk
Crowded trades/herd behaviour 48% 46% 6% Crowded trades/herd behaviour 51% 44% 5%
Regulatory changes 41% 47% 12%
Sovereign default risk 41% 49% 10%
Attrition in assets due to
38% 51% 11%
underperformance
Counterparty/credit risk 39% 57% 5%
Political uncertainty 37% 49% 14%
Attrition in assets due to
Hedge funds taking on excessive 33% 57% 10%
22% 55% 23% underperformance
betas
Acceleration in Hedge Fund Closures 18% 50% 31% Regulatory changes 32% 54% 14%
Asset/liability mismatches in hedge
16% 56% 27% Hedge funds taking on excessive
funds 28% 55% 17%
betas
Counterparty/credit risk 13% 64% 23%
Asset/liability mismatches in hedge
23% 65% 12%
funds
Sovereign default risk 13% 56% 30%
Asset/liability mismatches in FoHFs 20% 60% 20%
Asset/liability mismatches in FoHFs 13% 54% 33%
0% 20% 40% 60% 80% 100% 0% 20% 40% 60% 80% 100%
Investors now regard additional regulatory changes as the second biggest threat to the hedge fund industry in 2013,
which is up from the fifth spot last year. This is not surprising, given the ever increasing number of new and proposed
regulations the financial industry faces across many jurisdictions (e.g. Financial Transactions Tax, AIFMD, Basel III, Short
selling restrictions, etc.).
The risk of sovereign default, which has been considered as the second greatest risk for the last two years in a row, has
fallen off dramatically, dropping to ninth place with only 13% of respondents identifying it as a significant
risk. Counterparty/credit risk, also once a primary concern for investors, experienced a sharp decline as well, now
ranking just ahead of the risk of sovereign default. This is somewhat intuitive in the context of the global economy
continuing its slow recovery from the last financial crisis.
Instead, these risks have been now replaced by the risk of underperformance and political uncertainty. While investors
were focused on potential left tail risk events last year, it appears that they now view the risk of underperformance to be
of greater concern in 2013. Similarly, the risks associated with political uncertainty have grown significantly according to
this year's survey, illustrating investor concern over the unsettled political landscape in many parts of the world.
Confidential
Page 16 of 90

17. Other potential risks identified by investors included Hedge Funds taking on excessive beta, accelerated hedge fund
closures (impacting capacity), as well as asset/liability mismatches between Hedge Funds and their clients (impacting
liquidity).
2. Appetite for Start-ups
Start-ups continue to generate considerable interest among our survey respondents. Overall demand for start-ups
remains healthy, with appetite declining only marginally year over year. While appetite for start-ups remains healthy,
investors have become more discerning with regards to the organizational quality of the start-ups. Additionally, fees and
terms concessions have increasingly become a prerequisite for investment. As the chart below shows, investors are
increasingly looking for initial fee discounts (which we would attribute to growing demand for founders’ share class).
Although the reasons for investors to participate in seeding/emerging manager activities are varied (e.g. performance,
nimbleness, favourable terms and talent), investors continue to place a high premium on track record, continuity and
pedigree. As the graph below shows, 69% of respondents are theoretically able to invest in a manager with a 3+ year
track record carve-out from an established hedge fund, versus 25% who require some sort of relevant experience but
not necessarily a track record.
Investor appetite for start-ups and yearly evolution in ability to invest day one
New carve-out of 3+
year sub-strategy within 2013 39% 30%
an established multi- 2012 56% 20%
strategy hedge fund 2011 67% 13%
firm 2010 65% 6%
Start-up manager with
2013 38% 28%
3+ year track record
from another hedge 2012 51% 24%
fund 2011 61% 14%
2010 61% 6%
2013 26% 23%
Spin-out of bank prop-
trading desk with 3+ 2012 38% 22%
year track record 2011 52% 14%
2010 47% 6%
Start-up manager with
directly relevant 2013 17% 13%
investing experience but 2012 20% 13%
no explicit track record 2011 30% 9%
2010 28% 5%
Start-up manager with 2013 15% 10%
somewhat relevant 2012 14% 11%
investment experience 2011 26% 6%
(e.g. in long-only) 2010 25% 3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
We can theoretically invest on day 1
We can theoretically invest on day 1 only for a fee discount/equity share
Within Day 1 investing, 22% of the respondents in the survey are already active in seeding, and an additional 30% are
interested/considering seeding. Overall, a quarter of institutional intermediaries and end investors that responded to the
survey are active in seeding.
Confidential
Page 17 of 90

18. Active or interested in Seeding
In addition to seeding, some investors are also running “Emerging Managers” programs, which invest in managers under
a certain AUM (depending on the region and investor). In exchange for investing in early stage or small funds, investors
receive preferential terms and lower fees, such as founders’ share class terms. Fewer than 10% of our respondents
have an Emerging Manager platform; 8% intend to launch one and 83% have no intention of launching one.
Dedicated Emerging Manager Programmes
The new launch landscape continues to evolve, as start-ups navigate through the dynamic regulatory landscape, rising
management costs and heightened investor requirements. Investors continue to show strong interest in Day 1
investments, as fee and term concessions are increasingly becoming the expected norm.
Confidential
Page 18 of 90

19. 3. Interest in other formats for investing into Hedge Funds
The landscape of alternatives continues to evolve with new product offerings and innovative structures as managers look
to access new pools of capital and allocators are looking for innovative solutions to help them achieve their risk/return
objectives. The largest increase in this demand appears to be for long only fund structures offered by hedge fund
managers. A full 27% of respondents indicated plans to either begin allocating to the product or increase their current
allocation. Interest for longer dated vehicles was also significant, with 19% of investors planning to increase their
allocations or begin allocations and more than 30% of respondents already invested in the structure.
4. Terms and Fees
Amongst the options available to managers for improving asset/liability matching, fund level gates are viewed most
favorably by investors, with 71% reporting that they are generally able to invest in such funds or that the structure will
have no impact on their investment decision if justified. On the flip side, obligatory side pockets pose the greatest barrier
to investment for investors, with 45% reporting that they will have no interest/ability to allocate should a fund impose
side pockets.
Confidential
Page 19 of 90

20. Investors’ views on the following approaches to im proving asset/ liability m atching
We are generally able to invest
No impact on our decision if clearly justified by asset liquidity
Materially increases the hurdle to invest
No interest/ability to allocate
Fund Level Gates 35% 36% 21% 8%
Investor Level Gates 28% 31% 30% 11%
Hybrid Gates 25% 35% 30% 11%
Staggered Redemption 21% 25% 38% 15%
Obligatory Side Pockets 8% 11% 36% 45%
0% 20% 40% 60% 80% 100%
Investors anticipate hedge fund fees to continue its downward trend across the board. This has often been accompanied
by concessions in exchange for lower fees, such as large tickets and longer liquidity terms. Of note, investors want fees
to be justified by investment performance.
Investor predictions on the hedge fund ‘market standard’ (2/20) fees
Likely to decrease across the board 62%
Likely to decrease only in specific
situations (large ticket, longer lock-up 32%
etc)
Generally unlikely to decrease 6%
0% 20% 40% 60% 80%
Fees continue to be a primary consideration for both investors and managers. Close to half of the respondents
occasionally negotiate fees and almost a quarter always negotiate, often for concessions mentioned above.
Percentage of investors to negotiate fees when m aking hedge fund investm ents
Always 21%
Sometimes 42%
Rarely 27%
Never 9%
0% 20% 40% 60%
Over 75% of the respondents would prefer a hurdle rate, with the remainder being indifferent although most are
indifferent to the type of hurdle rate, with a slight preference for a benchmark based over fixed percentage hurdle.
Confidential
Page 20 of 90

21. Investor preferences towards m anagers having hurdle rates
Prefer managers to have a hurdle rate; indifferent to
40%
type
Prefer managers to have a hurdle rate based on a
22%
benchmark (e.g. libor)
Prefer managers to have a hurdle rate based on a fixed
15%
percentage
Indifferent 23%
0% 20% 40% 60%
5. Most Significant Developments in 2013
When we asked investors to predict what might be the most significant developments for 2013, the below are common
themes that emerged, ordered by frequency of mentions. What is interesting to note is that themes are similar to what
was predicted by investors for our 2012 survey, encouragingly with a more positive prediction for performance.
Hedge fund closures and consolidation: Like in 2012, the most commonly predicted development by investors for
the hedge fund industry in 2013 was further consolidation and closures. This may be tilted towards high profile manager
closures and managers that decide that they are fed up with running a hedge fund, and prefer to convert their
investments into a family office. Several respondents specifically identified beta driven or underperforming Hedge Funds
as prime candidates for fund closures. With costs increasing for funds and fees under pressure, talented risk takers may
be dissuaded from setting up their funds or smaller hedge fund managers will be forced to consolidate.
Fees and terms: Another overwhelming prediction by our respondents is that there will be continued hedge fund fee
compression. In addition, some respondents have raised the possibility that the standard 2/20 fee structure may be
modified, such as further introduction of hurdles and carry forward loss provisions. Of course, the expectation is that
there will be continued trade-offs for lower fees; namely, larger tickets, longer lock up, early stage investment.
UCITS and other fund structures: We continue to see interest and growth in UCITS vehicles, particularly from our
clients in Europe. Additionally, respondents mentioned increased likelihood of higher demand for managed accounts
particularly in Asia. Also raised is the possibility of increased convergence between Hedge Funds and retail vehicles and
the demand for 40 Act funds. Lastly, given market performance, liquidity and fee considerations, long only vehicles have
also become more of an interest for our respondents.
Performance: Our respondents generally expect funds to perform well in 2013. That said there is some divergence on
the predictions of the strategy that will be the best performer this year – such as L/S Equity, Emerging Market Equities
or Event Driven.
Appetite for new and emerging managers: This has led to respondents generally expecting higher appetite for
emerging managers, given the potential for higher returns, more nimble portfolio management and flexible terms.
Additionally smaller managers can often capitalize on niche strategies which may give them an advantage over their
larger counterparts. In terms of strategies, there were also several mentions for hedge fund managers launching long
only products and predictions for Equity Long /Short remain disputed.
Regulations: The regulatory environment remains dynamic and respondents overwhelmingly expect the regulatory
landscape to continue evolving, irrespective of the regions. Whether it is the continuing transparency or reporting
Confidential
Page 21 of 90

22. standards, shorting rules, taxation or country specific regulations such as QFII, the effects of course will be higher
trading, compliance and technology costs.
Other notable predictions made for 2013 include:
Increased transparency throughout the industry, more appetite for illiquid assets, revival of fundamental security selection
and continued focus on potential insider trading violations.
In any case, the hedge fund landscape continues to evolve and 2013 is already shaping up to be an exciting year. We
look forward to continuing our dialogue with you on some of these trends.
Confidential
Page 22 of 90

23. IV. Focus on Pensions and Institutions
Public and corporate pensions have increasingly been driving flows for the past several years and we expect to see
continued growth in allocations ahead. This year we focus on pension plans and insurance companies to take a closer
look at the behaviour of this influential group of institutional investors.
1. Institutions are leading flows to Hedge Funds
Public pension plans reported the highest on average allocation to Hedge Funds of our investors surveyed. Per the chart
below, public pension plans ranked ahead of all other investor groups with the average dollar amount of capital allocated
to hedge funds.
Allocations to SMHFs in US$ millions
6,000 Upper Quartile Lower Quartile Average
5,000 5,275
4,000
3,720 4,064
3,000 3,075
SMHF investments today -
2,037 370 1,000 484 3,427 2,475
2,000 1,450 2,175
1,800 1,539 1,318 1,225 1,760 138
376 755 463 1,300
US$ millions
1,000 874 250
100 100 80 200 75 200 83
104 300 173 120
- 1,220
Looking closer, public pension funds reported a wide range of allocations, with the highest cited top end of the range of
all investors surveyed. The median percentage allocation to Hedge Funds is typically 5-8% of an investment portfolio.
Confidential
Page 23 of 90

24. Allocation to SMHFs in US$ millions – Pensions and Insurance
6,000
5,275
5,000
SMHF investments today -
4,000
4,064
3,000
2,000 2,175
1,318 1,225 1,300
1,000
1,220
- 250 200
Pension Fund - Pension Fund - Insurance
Private / Public Company
Corporate
Upper Quartile Lower Quartile Average
Public pension funds are planning to increase the number of hedge fund allocations made in 2013 at a higher rate than
most other investors as seen on the chart below, an increase of 19% above existing allocations.
Number of new hedge fund allocations in 2012/2013
In line with the above trend, public pension plans are expecting to increase their allocations to Hedge Funds more so
than corporate pensions and insurance companies.
Number of new hedge fund allocations in 2012/2013 – Pensions and Insurance
8.0 -2%
+12% +19%
5.4 5.6 5.5
6.0 5.0
4.4 4.4
4.0
2.0
0.0
Pension Fund - Private / Pension Fund - Public Insurance Company
Corporate
2012 2013
Confidential
Page 24 of 90

25. Furthermore, pensions have larger average allocations to Hedge Funds than other investors. As visible in the charts
below, both public and corporate pensions allocate significantly larger amounts of capital to Hedge Funds per investment
than do other investors.
Typical allocation size in US$ millions – Initial and long-term target
All
80
60 50
50
40 25
20 25 `
3 8
-
Typical initial Typical long-term
investment size holdings
Upper Quartile Lower Quartile Average
Pension Fund – Private/Corporate Pension Fund – Public
100 82 300 294
80 75
60 60 200 200 193
50 141
40 100
20
`
79 `
79
20 20
- -
Typical initial Typical long-term Typical initial Typical long-term
investment size holdings investment size holdings
Upper Quartile Lower Quartile Average Upper Quartile Lower Quartile Average
Pension funds typically hold smaller numbers of hedge fund investments in their portfolios than other invesors. Compared
with the rest of the investor universe, they have fewer total allocations.
Total number of distinct SMHF investments within hedge fund portfolios
Upper Quartile Lower Quartile Average
85
80
70
66
60
45 53
45 41 41
40 41
SMHF investments today -
37 34 25 30 34 20
29 19 25 25 16
20 21 17 24
15 15 18 15 16
10 10 11 9 13
5
number
5 4
-
Confidential
Page 25 of 90

26. As per the graph below, both corporate and public pensions typically have fewer hedge fund investments than do
insurance companies, or other investors as shown above, although a wide range of dispersion does exist.
Total number of distinct SMHF investments within hedge fund portfolios – Pensions and Insurance
2. Institutions’ Objectives for their Hedge Fund Portfolios
Investors look to Hedge Funds for high risk-adjusted returns primarily as well as diversified returns versus equity markets,
as shown in the chart below.
In the context of underfunding that is frequent amongst pensions as well as the challenge of meeting targeted rates of
return using traditional asset classes, Hedge Funds have become part of the solution in the search for consistent returns.
As many plans pay out 60-80% of all benefits out of their investment returns, it is essential to lock in consistent risk-
adjusted returns that can be achieved with Hedge Funds.
Further, since 2008 there has been a meaningful shift away from Equities as plans have de-risked following the
drawdowns post credit crisis. Much of that capital has been redeployed to Alternatives, within which Hedge Funds have
been amongst the largest recipients of capital inflows.
Importance of the following objectives for Institutions’ Hedge Fund Portfolio
Very important Somewhat important Not important
High risk-adjusted returns 73% 25% 2%
Diversified/uncorrelated returns, vs equity
72% 25% 4%
markets
High absolute returns 46% 43% 11%
Diversified/uncorrelated returns, vs other
35% 51% 14%
hedge fund holdings
Low volatility of returns 23% 68% 9%
0% 20% 40% 60% 80% 100%
Confidential
Page 26 of 90

27. Per the chart below, a majority of pension investors expect 5-10% target returns from their hedge fund investments.
Somewhat below expectations for the Equities market, these target returns highlight investor focus on risk-adjusted
returns that are diversified from equity markets rather than high absolute returns.
Target Hedge Fund Returns
3. Selection Process and Due Diligence
Per the chart below, the majority of pension plans require AUM to be greater than $250 million before they can invest
and nearly 50% require funds to be $500 million in size. Due to the typically large position sizes highlighted above,
pension plans look to invest in larger managers in order to avoid owning an outsized portion of any particular fund.
However, a subset of pensions that can invest in smaller, more nimble managers does exist.
Minimum AUM that institutional investors require to consider investing
40% 38%
31%
30%
20%
20%
10%
4% 4% 4%
0%
$1-49 $50-99 $100-249 $250-499 $500 $2-5 billion
million million million million million-1.99
billion
As shown below, the vast majority of pensions take 4-12 months to perform due diligence on a hedge fund manager.
However, oftentimes the investment process can take longer, especially if pensions work with consultants or advisors.
Institutions’ typical lead time for making a hedge fund allocation from first contact
Confidential
Page 27 of 90

28. Once a pension fund has made the decision to move forward with an allocation, it is common to negotiate terms. As the
chart below illustrates, management and performance fees are frequently challenged whereas performance hurdles and
“clawbacks” are less frequently contested.
Furthermore, it has become commonplace for pensions to establish strategic partnerships with managers whereby they
receive lowered fees and other preferential treatment in exchange for a high minimum level of invested assets.
How frequently institutions negotiate the following terms
The way that pension plans are allocating to Hedge Funds is changing as more are choosing to invest directly with
managers rather than utilize fund of funds. Much of this can be attributed to the knowledge that institutional investors
have gained from investing through funds of funds over time and a desire to limit fees going forward.
The shift towards direct investments has caused fee compression for fund of funds, and changed the tradition model to
more of an advisory relationship where the fund of funds offering resembles a consultant relationship.
Institutions’ percentage allocation to Hedge Funds via SMHFs (versus FoHFs)
80%
61%
60% 55%
40%
20%
0%
Jan-13 Expected Dec
2013
The majority of pension plans utilize consultants for their investment needs and place significant emphasis on the advice
that hedge fund consultants provide. Over the past several years, several consultants have become increasingly popular
and influential. The preferred lists of Hedge Funds that they generate influence the choices of many investors in the
industry. Therefore, consultants are oftentimes seen as the gatekeepers of capital.
Per the chart below, the majority of investors rely on hedge fund specialist consultants for advice on their hedge fund
allocations rather than traditional consultants that may have other areas of expertise.
Confidential
Page 28 of 90

29. Preference for various types of Advisors/Consultants for purposes of hedge fund investments
Most investors rely on consultants for both investment and operational due diligence, which highlights the importance of
positive ratings in both areas. However, there is a subset of investors that prefers to use consultants only for operational
due diligence, these groups typically have in-house teams to perform investment due diligence. While conclusions may
be reached internally, consultant views may still be influenctial factors on final investment decisions.
Use of Advisors/Consultants for purposes of Investment and Operational due diligence
4. Hedge Funds in the Portfolio
Once a pension decides to allocate capital to a hedge fund, the position is most likely held in a dedicated hedge
fund/alternatives category of the portfolio as per the findings below. However, some pension plans may decide to bucket
some or all of their hedge fund positions into the traditional asset class.
Confidential
Page 29 of 90

30. Allocations to Hedge Funds through dedicated Hedge Funds vs. traditional asset class buckets
Depending on the composition of the traditional portfolio, it is fairly common to include certain hedge fund allocations in
the traditional asset class bucket, especially in Equities. Funds that have a long bias with exposure to market beta, for
instance, would be considered prime candidates for inclusion into a traditional asset class category.
As pension funds reduced their Equities positions in the wake of the credit crisis following large drawdowns, some
substituted their Equities holdings with Equities Hedge Funds in their traditional Equities bucket, in order to inject some
downside protection.
Asset classes that investors allocate into traditional asset class buckets
Hedge fund turnover of 8% in pension portfolios is relatively low compared with other investor segments, where the
average percentage of annual turnover is closer to 10%. This can be explained by the nature of the investment process,
which is often dictated by an annual investment meeting during which key portfolio re-balancing decisions are made. The
tendancy for pension plans to turn the portfolio over with less frequency aligns with the prime investment goals shared by
the group to invest for the long-term.
Annual turnover of each investor’s hedge fund portfolio
Average Turnover = 8%
Average Turnover = 8%
Average Turnover = 10%
Confidential
Page 30 of 90

31. 5. Outside of Traditional Hedge Funds
In addition to investing in Hedge Funds, investors cited existing activity in longer-dated vehicles and co-investment
opportunities. These investment vehicles are popular with the pension community given the focus on long-term
investments. Further, twice as much involvement and activity was cited in dedicated emerging manager programmes as
by other investors. Not surprisingly, least interest was reported in equity stakes in funds.
In addition to Hedge Funds, investors are interested in the following
Already Active Not active but interested Not interested
Longer dated vehicles (3-5yr) 29% 25% 46%
Co-investment opportunities 11% 34% 55%
Dedicated Emerging manager/seeding
16% 20% 64%
programmes
Yield-oriented products 14% 21% 64%
Equity stakes in funds 7% 23% 70%
Seeding vehicles 9% 16% 75%
0% 20% 40% 60% 80% 100%
Of the various means available for investing via a managed account, the use of single manager funds or “funds of one”
as they are otherwise known attracts the largest proportion of active or very interested investors. These arrangements
grant investors special privileges in exchange for locking up capital, putting a significant amount of assets into the fund,
or entering into an early investment arrangement.
As seen below, more interest was cited for funds of one than traditional managed accounts, illustrated by “segregated
accounts in a 3rd-party platform” and “commingled accounts in a 3rd-party platform”. Least interest was reported in
owning a proprietary platform, since this group of investors prefers active management by an outside party.
Institutions’ preferred routes for investing via managed accounts
Already active Very interested Somewhat interested Not interested
Single investor funds 18% 8% 30% 44%
Ad hoc/opportunistic managed accounts 14%4% 29% 53%
Own proprietary platform 6%0% 24% 69%
Segregated accounts in a 3rd-party
12% 10% 24% 53%
platform
Commingled accounts in a 3rd-party
4%
4% 29% 63%
platform
0% 20% 40% 60% 80% 100%
The majority of pension plans are either already active or interested in Multi-Strategy Hedge Funds as well as dedicated
advisors and consultants. Funds of funds providing advisory-only services are relatively out of favour amongst the group.
Confidential
Page 31 of 90

32. Institutions’ interest in allocating to Hedge Funds via the following vehicles
Already Active Not active but interested Not interested
Multi-strategy SMHFs 50% 26% 24%
Dedicated Advisor/Consultant 25% 16% 58%
Bespoke/customised FoHFs 16% 15% 69%
Niche FoHFs (e.g. credit funds only) 13% 16% 71%
Broad/diversified FoHF's 18% 4% 78%
FoHF providing Advisory-only service 5%13% 82%
0% 20% 40% 60% 80% 100%
Confidential
Page 32 of 90

33. PART 2 – DATA APPENDICES
Confidential
Page 33 of 90

34. Appendices Table of Contents
Appendix I – The Participants 35
1. Breakdown of Participants 35
2. Portfolio Characteristics 38
Appendix II – Key Industry Trends and Forecasts 42
1. Forecasts and Risks 42
2. Market Returns 43
3. Appetite for Start-Ups 46
4. Fees and Economics 48
Appendix III – Focus on Pensions and Institutions 50
1. Pension Funds are Leading Flows to Hedge Funds 50
2. Institutions’ Objectives for their Hedge Fund Portfolios 53
3. Selection Process and Due Diligence 54
4. Hedge Funds in the Portfolio 56
5. Outside of Traditional Hedge Funds 57
6. Strategy Preferences 58
Appendix IV – Alternative Routes to Absolute Return 59
1. UCITS/Regulated Funds 59
2. Managed Accounts 60
3. Alternative Investment Formats and Structures 62
Appendix V – Strategy Appetite 63
1. Equity Strategies 65
2. Fixed Income/Derivative Strategies 72
3. Other Strategies 77
Important Information and Disclaimers 90
Confidential
Page 34 of 90

35. Appendix I – The Participants
1. Breakdown of Participants
 The respondents manage an aggregate $1.034 trillion in Single-Manager Hedge Funds (“SMHFs”).
 We had close to 550 responses globally. In order to minimise double-counting of assets, we trimmed our data to 522
unique pools of capital.
 Our survey respondents were well diversified by type, by region, and by size.
Breakdown of participants by location of their headquarters
Regional distribution (by number) Regional distribution (by assets)
 Americas represented the largest region by number of respondents and by assets. While Asia-based investors
account for 19% of respondents by number, they account for 5% by AuM.
Breakdown of participants by investor type
Distribution of categories (by number) Distribution of categories (by assets)
 Institutional FoHFs are the largest sector, making up 25% of respondents by number and 43% by assets. Family
Offices as a group constituted 20% of all respondents, but their chunk of total assets was much smaller, at 5%.
 Pension Funds/Insurance Companies are also well represented, making up 12% of respondents by number and also
by assets
As in our previous survey reports, to avoid displaying 12 line items per data point, we have aggregated the12 investor
types into 3 broad categories based on similarities in their behaviour:
 “End Investors” – Endowment/Foundation, Family Office, Bank Treasury/Proprietary Capital and Pension Funds and
Insurance Companies;
 “Institutional Intermediaries” – Advisor/Consultant, FoHF with primarily institutional investors and Seeder/Incubator;
Confidential
Page 35 of 90

36.  “Retail Intermediaries” – Private Bank and FoHF with primarily retail investors.
Distribution of categories (by number) Distribution of categories (by assets)
 End Investors make up the largest category by number (42%); Institutional Intermediaries make up the largest
category by assets (66%).
Regional distribution of categories (by number) Regional distribution of categories (by assets)
100%
100%
18% End Investors
End Investors 23%
33% 80%
80% 44% Institutional
44% Institutional
Intermediaries
Intermediaries
56%
Retail
Retail 60% Intermediaries
60% Intermediaries
47%
40% 74%
40%
40%
39%
54%
36%
20%
20%
30%
28%
17%
9% 2%
8% 0%
0%
Americas EMEA Asia
Americas EMEA Asia
 Across Americas, EMEA and Asia, Institutional Intermediaries represent 39%, 40% and 36% respectively by number.
By assets, this proportion increases to 74%, 47% and 54% respectively.
Confidential
Page 36 of 90

37. Distribution of SMHF AuM of respondents
By investor category
Average AuM
 All: $2,037 million
 End Investors: $996 million
 Institutional Intermediaries: $3,461million
 Retail Intermediaries: $1,471 million
 The average amount of assets allocated to Single-Manager Hedge Funds amongst our respondents is $2.04 billion.
42% of respondents have in excess of $500 million invested into SMHFs, and only 16% have less than $50 million.
 Institutional Intermediaries have the highest average asset size, with nearly half having more than $1 billion in assets.
 End Investors’ SMHF assets are much smaller on average, with an average hedge fund portfolio size of $996 million,
and 18% managing under $50 million.
By investor region
Average AuM
 Americas: $3,232 million
 EMEA: $1,469 million
 Asia: $498 million
 Asia has the highest percentage of smaller investors, 37% having less than $50 million allocated to hedge fund
managers, and 12% having more than $1 billion allocated, whereas 41% of investors in the US have more than $1
billion invested in Hedge Funds.
Confidential
Page 37 of 90