Private equity and real estate fundraising down to 2004 level

The study - which polled over 100 institutional investors worldwide - found 40% of respondents did not make a commitment to a private equity fund during 2009.

However, 67% are set to make new commitments during 2010 and 11% plan to increase existing ones.

Preqin Investor Data manager Helen Kenyon said: "Our conversations with investors have shown us that, though confidence suffered when valuations fell, the vast majority still have an appetite for private equity.

"The proportion of investors that are actively seeking to invest in the asset class is gradually increasing, and it is notable that half of investors have set aside more capital for new private equity investments in 2010 than they did in 2009."

She added fewer investors are now suffering from the denominator effect - when the private equity share of their portfolio increases and exceeds strategic allocation parameters because of the value of equity and bond allocations decline - and confidence is improving.

According to the investors surveyed, distressed private equity, small to mid-market buyout and secondaries present attractive opportunities for investment.

IE Consulting principal Matthew Craig-Greene said: "As expected, and despite the efforts of many managers, it has proved extremely difficult for private equity fund managers to adequately convince pension funds and other investors of the imperative to invest in 2009."

He added: "The key to their success will be how they communicate with their current investors: few private equity managers will be looking to raise larger funds than they last time they were out in the market and it may be possible to reach an adequate investment level without too much need to go outside of the existing investor base."

Preqin also surveyed institutions on real estate investments. Findings revealed 2009 saw US$42bn raised by 103 funds worldwide. This result represents the worst performance for this asset class since 2004, when $37bn was raised by 136 funds worldwide.

In addition, 2009 figures represent a 69% decline compared with 2008, when $133bn was raised by 225 funds worldwide.

Separately, Fitch Ratings said 2009 saw the best hedge funds performance for a decade, while the industry is experiencing "fundamental changes to its business model and in its relationship with investors".

Fitch head of EMEA fund and asset manager rating group Aymeric Poizot said: "The development in 2009 of UCITS-compliant hedge funds, designed as a vehicle to provide both institutional and retail investors with a transparent and liquid access to alternative investments, has been interesting in that regard."

The agency said the broad HFRI composite index grew by 2.7% in the last quarter of 2009 and by 20% over 2009.

Craig-Greene said: "Typically, outperformance drives asset inflow. As the probable influx of new capital is potentially magnified by retail money entering through UCITS funds, for example, it is possible that the aggregate performance of the industry will drop in response, as weaker managers find it easier to raise investment capital."