Investors in hedge funds are becoming pickier. While the sector remains attractive to institutional investors, they are concentrating their allocations on fewer hedge funds, according to Deutsche Bank's annual Alternative Investment Survey, published on February 23.

The German bank surveyed 500 institutional investors, accounting for over two thirds of the $2.9 trillion in assets managed by the global hedge fund industry. It found that, on average, these investors each had money in 36 hedge funds, compared with 60 funds five years ago. Just over half (53%) had fewer than 25 direct hedge fund investments in their portfolio. Five years ago, that percentage was 19%.