The slowdown in activity – which is a further drop from 2007 when 97 investments totalling €2.2 billion were made - shows that fund of funds managers chose to step back from further commitments while the market direction was unclear – plus a continued focus on ensuring existing investments are on track. "However the results also show that fund of funds managers see opportunities opening up for 2010 for un-invested capital with a focus on potential secondary market transactions as well as vintage 2010 funds," said INREV Research Director Lonneke Löwik.

Two thirds of respondents said the secondary market is now a more important part of investment strategy, and all respondents see opportunities to enter funds at advantageous prices. Other main drivers are immediate access to locations and sectors as well as potential capital growth if units re-value to published net asset value. Of the sample, 93% will consider increasing exposure to existing funds. However, this has not yet translated into investment, with only 4% of funds of funds completing a trade in the last 12 months. Some 96% of respondents cited the inability to price fund underlying assets as the main obstacle.

Some concerns also exist over the stability of fund sponsors, and the potential for managers to be distracted by legacy issues, and INREV Interim CEO Andrea Carpenter noted this has boosted investor reporting requests from fund managers.

"In the short term this has resulted in increased workloads for fund managers but there will be a long-term benefit for both sides with improved transparency, particularly on issues such as risk management and reporting on debt issues," she said.

The survey was completed by 16 fund of funds managers with 30 funds and total target equity of €10 billion. The INREV database now holds information on 52 Fund of Funds, representing €17 billion of target equity.