Investors are expected to pump $49 billion into funds that mimic hedge fund strategies over the next year, to make so-called "liquid alternatives" the fastest growing part of the asset management industry, a survey said.

That would mark a 44 percent jump in the amount of money brought in by these funds in the last year, according to a survey released on Monday by Deutsche Bank of almost 300 hedge fund managers and investors overseeing $6.8 trillion in assets.

Liquid alternatives replicate certain hedge fund strategies, such as the ability to make negative bets on stocks and borrowing money to increase their position size, but unlike traditional hedge funds, they offer a daily or weekly option to cash out in a similar manner to mutual funds.

"Retail investors are attracted towards these regulated, liquid form of hedge fund strategies," said Chris Hawkins, a portfolio manager at fund of hedge funds Gottex.

"Some institutions have also been looking to invest into these funds," he added.

Demand for these regulated funds has been strong as investors get ready for interest rate hikes and seek to diversify away from long-only funds into those employing hedge-fund-like tactics to protect themselves against market losses.

"This (growth) is not something that we have seen even in the hedge fund industry in its heyday," said Anita Nemes, global head of the Deutsche Bank team that links hedge funds with potential investors. The combined market for liquid alternatives in Europe and the United States has risen by about 40 percent annually since the financial crisis to more than $600 billion. The hedge fund industry has grown by 13 percent annually during the period. Half of the investors who responded told the bank they now allocated to liquid alternatives, up from just over a fourth last year. Nearly three quarters of those investing in European products and two thirds of investors allocating to offerings in the United States said they planned to raise allocations over the next 12 months.