Almost one in seven hedge fund managers expect to raise permanent capital in the next two years either through a flotation or the sale of a stake in their firm, before falling fee scales and rising costs squeeze some of them out of business, according to fresh research.

As many as 13% of hedge fund managers said they expect to raise permanent capital in the next two years, according to a survey by accountant Ernst & Young of more than 100 hedge fund managers and fund of hedge fund managers, which collectively run $900bn (€637bn) or 55% of the total assets managed by hedge funds worldwide.