Institutions have mixed feelings towards the performance of their hedge fund portfolios, with Asian investors particularly disappointed by emerging markets-focused strategies, finds a Preqin survey.

While 52% say hedge fund returns have met their expectations, 43% feel performance has fallen short. Only 5% say yields have exceeded anticipated returns – far lower than the 11% in 2011 and 19% in 2010.

The choice of strategy played a role in the level of satisfaction among investors, with long/short equity – the most predominant among hedge funds in Asia – failing to meet expectations of 55% of institutions. Commodity trading adviser (CTA) funds were ranked second-most disappointing, albeit with a much lower rate of 18%.

Conversely, global macro funds exceeded the performance expectations of 30% of investors, followed by fixed income (26%) and CTAs (15%), as indicated by Preqin’s poll of 85 institutional investors globally. They were chosen from a cross-section of institution types and sizes, hailing from markets in the West to emerging Asian economies.

Geographic focus is another key contributor to performance, with emerging markets-focused hedge funds registering dissatisfaction from investors, most notably among Asia-based institutions. European-centric hedge funds had also eroded investor confidence, contributing to a shift towards US-focused strategies.

Fund of hedge funds, despite a continuing wave of consolidation amid shrinking assets, have a “relatively positive” outlook, notes the study. Of the institutions polled, 55% invest in FoHF managers, with about three-quarters of those respondents intending to maintain their allocation, while 15% were uncertain as to whether to keep their investment.

However, a trend of institutions investing directly into hedge funds – and bypassing FoHF managers – was seen among respondents, with 9% planning to redeem from FoHFs as they had developed in-house resources to evaluate funds.

Despite the mixed level of satisfaction towards hedge fund performance, 54% of institutions plan to invest up to $99 million in new capital in hedge funds in the next 12 months, with 29% intending to allocate between $100 million and $349 million to the asset class.

The Korean Teachers’ Credit Union is among the institutions that plan to increase their hedge fund exposure in the near term, says Preqin. The $16.5 billion pension has primarily invested in FoHFs, but is now considering making its first direct allocations to single-manager funds. It has indicated a preference for credit arbitrage and fixed income strategies.

A few Asian managers may benefit from the $45 billion Swiss National Accident Insurance Institution, which plans to add two to three new hedge funds to its portfolio in the next 12 months. It is particularly interested in macro managers based in Asia, says Preqin.