Hedge fund investors are likely to move almost a sixth of their cash into the hands of different managers in 2012, a report on Friday showed, as firms in the $2 trillion (1.3 trillion pound) sector grapple with winning back the confidence of clients hurt by losses in 2011.
The report, conducted by Barclays
Investors will also put some $80 billion of new money into the industry, according to the report, titled 'The Money Trail'.
This would constitute the largest annual net flow of assets into hedge funds since the financial crisis, but is still less than half the $195 billion investors ploughed into the industry in 2007, the report showed.
The report surveyed 165 investors at a recent symposium in New York, who collectively invest around $500 billion with hedge funds, one quarter of the industry's total assets under management.
Hedge funds experienced one of their worst annual performances in 2011 -- the second negative year in four -- though most investors are expected to stick with the sector after other asset classes also performed poorly.
The average fund sank 4.8 percent in 2011, data compiled by Hedge Fund Research showed, as managers across strategies were wrongfooted by volatile markets.
The report said global macro strategies, which make calls on global news events by betting on bonds, currencies and equities, as well as systematic volatility funds, are expected to attract the most net flows, as investors try to avoid correlation with equities.
(Reporting by Tommy Wilkes; Editing by Jon Loades-Carter and Sinead Cruise)