Long/short equity funds have long been the preference for institutional and private investors active in the alternative investments space. This trend is one that is not stopping anytime soon. Despite that the LAB Long/Short Index dropped 1.46 percent in January, investor demand for the liquid strategy increased significantly.
The increase in demand for long/short funds since January 2009 is staggering. During January 2010, BHA’s team of analysts spoke with 181 investors that indicated an interest in researching and reviewing long/short equity funds. This is striking when compared with investor sentiment a year ago when 87 investors expressed interest. Even the comparison between December 2009 and January 2010 is significant: the number of investors interested in long/short equity funds more than doubled in one month’s time.
Granted, these investors are quite different from one another in terms of the funds they will choose for allocations, but one thing remains the same – long/short equity funds allow for redemptions and transparency that are favorable in this recovering market. Just ten days into February, the BHA team has spoken to more than 45 investors looking for long/short equity funds. It will be interesting to see how these funds perform over the next few months, but as the market continues to rebound, it is safe to say that demand for long/short funds is not going away.
