Hedge funds have delivered subpar returns for more than a decade, but a new survey from Preqin finds many investors are planning to stick with them because they fear another sharp market downturn is coming.

What it means: Half of the investors surveyed said their hedge fund allocations failed to meet expectations, and only 37% believe 2019 performance will exceed 2018’s levels. This follows an Axios analysis that found hedge funds had underperformed the S&P 500 by more than 100% since 2009 and less than 1% of the gain in Americans' financial assets has been in hedge funds since 2015.

Yes, but: 61% of investors in Preqin's survey say the current equity market cycle has peaked (up from 45% a year ago) and 40% are looking to position their hedge fund portfolios more defensively as a result. Further, 4 out of 5 investors plan to hold or raise their allocation to hedge funds over the longer term — the highest proportion since 2014.

  • Hedge funds did much better than traditional equities during the global financial crisis.

The impact: "This is a pivotal moment for the hedge fund industry," Amy Bensted, Preqin's head of hedge fund products, said in a release.

  • "Fund managers may be optimistic about their longer term relationship with investors, but they will need to work hard in the coming months to effectively attract and retain capital."

Go deeper: Explore why the hedge fund moment is over

Go deeper

Updated 6 hours ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 10 p.m. EST: 32,135,220 — Total deaths: 981,660 — Total recoveries: 22,149,441Map.
  2. U.S.: Total confirmed cases as of 10 p.m EST: 6,975,980 — Total deaths: 202,738 — Total recoveries: 2,710,183 — Total tests: 98,481,026Map.
  3. Politics: House Democrats prepare new $2.4 trillion coronavirus relief package.
  4. Health: Cases are surging again in 22 states — New York will conduct its own review of coronavirus vaccine.
  5. Business: America is closing out its strongest quarter of economic growth.
  6. Technology: 2020 tech solutions may be sapping our resolve to beat the pandemic.
  7. Sports: Pac-12 will play this fall despite ongoing pandemic — Here's what college basketball will look like this season.
  8. Science: Global coronavirus vaccine initiative launches without U.S. or China — During COVID-19 shutdown, a common sparrow changed its song.
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A view of Levi's Stadium during the 2019 Pac-12 Championship football game. Photo: Alika Jenner/Getty Images

The Pac-12, which includes universities in Arizona, California, Colorado, Oregon, Utah and Washington state, will play football starting Nov. 6, reversing its earlier decision to postpone the season because of the coronavirus pandemic.

Why it matters: The conference's about-face follows a similar move by the Big Ten last week and comes as President Trump has publicly pressured sports to resume despite the ongoing pandemic. The Pac-12 will play a seven-game conference football season, according to ESPN.

Dave Lawler, author of World
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Data: Gavi, The Vaccine Alliance; Map: Naema Ahmed/Axios

A global initiative to ensure equitable distribution of coronavirus vaccines now includes most of the world — but not the U.S., China or Russia.

Why it matters: Assuming one or more vaccines ultimately gain approval, there will be a period of months or even years in which supply lags far behind global demand. The COVAX initiative is an attempt to ensure doses go where they're most needed, rather than simply to countries that can produce or buy them at scale.

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