FOR IMMEDIATE RELEASE

Contact:
Mark Lane+1 212 412 1413
mark.lane@barclayscapital.com
Marc Hazelton+44 20 7773 2483
marc.hazelton@barclayscapital.com

UP TO $400 BILLION OF MONEY ‘IN PLAY’ FOR
HEDGE FUNDS IN 2012
Coming year set to bring significant opportunities for hedge funds
New York, NY, January 13, 2012 – The hedge fund industry faces challenges in 2012, but also a year ofsignificant opportunity, according to a Barclays Capital report, The Money Trail, released today.
The report contains analysis based on a survey of 165 investors conducted at the firm’s recent Prime
Services Hedge Fund Symposium hosted in New York, as well as one-on-one investor interviews and otherindustry analysis. The surveyed investors manage approximately $4 trillion in assets under management(AUM), of which approximately $500 billion is allocated to hedge funds. This represents one quarter of thehedge fund industry’s total AUM.
With an uncertain macro economic environment ahead and the recent volatility in global markets, hedge
fund investors plan on making considerable changes over the coming year. However, some of these changes
will present significant opportunities for hedge funds, with 56% of the surveyed investors planning toincrease their hedge fund allocations over the next twelve months, more than seven times the number thatplan to decrease their allocations. Endowments and foundations, private banks and public pensions are themost likely allocators of new capital to hedge funds in 2012.
“Our analysis indicates that investors are likely to allocate approximately $80 billion of new capital to thehedge fund industry this year,” said Ajay Nagpal, Head of Prime Services at Barclays Capital. “2012 has thepotential to be the most significant year for new capital allocations to hedge funds since 2007.”
In addition to the approximately $80 billion of new assets, investors are likely to reallocate some $300 billionof existing hedge fund assets within and across hedge fund strategies. In total, the hedge fund industry
could see between $350 billion and $400 billion of money ‘in play’ over the next twelve months – almost one
fifth of the current total hedge fund industry AUM.
Of the new flows, investors plan to allocate most to global macro and systematic / volatility strategies, asthey look to add more tactical and trading-oriented strategies with relatively low correlation to equities.
Reallocations will be most significant within equity and credit strategies, reflecting a combination of
investors’ redemptions from poor performers, their belief in mean reversion and a preference for more
specialized products within these strategies.
- more About Barclays Capital
Barclays Capital is the investment banking division of Barclays Bank PLC. With a distinctive business model, Barclays Capital provides large corporate,
government and institutional clients with a full spectrum of solutions to their strategic advisory, financing and risk management needs. Barclays Capitalhas offices around the world, employs 25,000 people and has the global reach, advisory services and distribution power to meet the needs of issuers
and investors worldwide. For further information about Barclays Capital, please visit our website www.barclayscapital.com
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FOR IMMEDIATE RELEASE

Contact:
Mark Lane+1 212 412 1413
mark.lane@barclayscapital.com
Marc Hazelton+44 20 7773 2483
marc.hazelton@barclayscapital.com

Pendulum Swinging Toward Smaller Managers
Based on investor preferences, the trend of an increasing share of allocations going to funds with less than
$1 billion in AUM is set to continue in 2012. During the first nine months of 2011, small hedge funds
doubled their share of new flows, compared to full year 2010 (18% of total hedge fund net flows vs. 9%).
For 2012, that trend is likely to continue, with investors indicating a 77 percentage point tilt in favor of
allocating to small funds. This compares with only a 10 percentage point tilt toward increasing allocations tolarge funds (AUM>$5bn).
“Smaller managers are frequently seen by investors to be more agile in adapting their existing strategies togenerate alpha,” said Louis Molinari, Head of Capital Solutions in Prime Services at Barclays Capital. “Withthe greater transparency, and better fee and liquidity terms that many new and smaller funds offer, investors
continue to gain confidence with investing in this segment of the hedge fund industry.”
Other key trends identified in The Money Trail include:• Investor diversification across hedge fund managers continues
o 60% of investors plan to increase the number of managers in their portfolio compared to 25% who
plan to maintain current levels and 15% who plan to reduce themo 40% of investors plan to both increase their allocation to hedge funds as well as the number ofmanagers in their portfolios, compared to only 1% who plan to cut both
• Liquidity remains a top investor priority
o some 90% of current hedge fund allocations have been to funds that had either no initial lock-up or
only a one-year lock up
o the majority of investors who are looking to make changes to their liquidity profile want to increase
allocations to more liquid strategies
Barclays Capital’s Prime Services business provides clients across the globe with a cross-asset class offering
for financing, clearing and execution. The firm offers unique frameworks for asset protection, margining
solutions, industry intelligence and insight, analytics and execution technologies. Barclays Capital has beenrecognized for its leadership in numerous industry polls and surveys, including 113 Best in Class Awards inGlobal Custodian’s 2011 Prime Brokerage survey, 130 Best in Class Awards in Global Custodian’s 2011 OTC
Derivatives Prime Brokerage survey, and Best Prime Broker Technology provider at HFMWeek’s 2011 US
Service Provider awards.
Notes
The findings of The Money Trail are based on the responses of a relatively small number of investors, andmay not be representative of the entire hedge fund industry.

About Barclays Capital
Barclays Capital is the investment banking division of Barclays Bank PLC. With a distinctive business model, Barclays Capital provides large corporate,
government and institutional clients with a full spectrum of solutions to their strategic advisory, financing and risk management needs. Barclays Capitalhas offices around the world, employs 25,000 people and has the global reach, advisory services and distribution power to meet the needs of issuers
and investors worldwide. For further information about Barclays Capital, please visit our website www.barclayscapital.com
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