Hedge fund trends in 2015: Deutsche Bank

Hedge Fund

Despite producing an average return of 3.3 percent last year, the hedge fund industry is on track to surpass $3 trillion in assets this year, according to a new survey by Deutsche Bank.

"We have seen a doubling in assets under management since 2008," said Barry Bausano, president of Deutsche Bank Securities and co-head of global prime finance for Deutsche Bank.

"That's despite what's been pretty pedestrian performance."

The Alternative Investment Survey, set for release Tuesday and previewed by Bausano on CNBC's " Power Lunch ," found that expectations for returns are much lower for 2015.

"That is healthy," he said.

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This year, only 14 percent of respondents are expecting to get in excess of a 10 percent return, compared with 37 percent last year.

The average return expectation this year is 8.1 percent, compared with 9.2 percent in 2014. Last year, the survey's respondents got a 5.6 percent return compared with the industry's 3.3 return.

"Not only is strategy selection very important but increasingly manager selection has driven returns," Bausano said. "The top 5 percent of managers last year averaged a 22 percent return."

Investors are also increasingly attracted to quantitative strategies this year, he said, with commodity trading advisors (CTAs) receiving the greatest interest.

"The ones that have attracted a lot have been the trend following managers," Bausano said. "CTA managers were able to capture trends that might have been counterintuitive."

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As for where investors are expecting the best performance in 2015, the United States and Canada top the list, followed by Western Europe, Japan, China and India.

-CNBC's Kerima Greene contributed to this report.

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