Hedge fund inflows are expected to top $220 billion this year as asset levels return to near pre-crisis levels in a reversal of last year’s trend of redemptions, according to a survey of investors published on Tuesday by Deutsche Bank.

The bank in January surveyed 606 investors, including fund-of-funds, public pensions, endowments and other institutional investors. These investors had about $1.07 trillion invested in hedge-fund assets and 42% of the respondents were fund-of-funds.

Investors predicted that $100 billion of cash will flow into hedge funds this year, but the German bank said it estimates new investments to be closer to $222 billion. Such an increase would lift hedge fund assets under management to $1.72 trillion. That is still below the 2007 high of $1.9 trillion.

After solid returns for hedge funds in 2009 and a renewed appetite for risk and risk adjusted returns, nearly one-third of investors with 10% or more of their holdings in cash are ready to invest that capital in hedge funds, said Scott Carter, head of global prime finance sales and hedge fund capital group at Deutsche.

Carter was speaking to reporters at a presentation held at the firm's New York offices on Tuesday.

“Investors still have cash to allocate: 29% of investors have 10% and upwards. Furthermore, they are looking to reduce their cash levels over the next six months by $3.09 billion,” the bank said in its report.

Funds’ gates have come down allowing investors access to their money, the survey found. More than 60% of investors said that fewer than 5% of managers were still gated, and almost half of the investors polled said none of their existing managers have gates. The survey found that 80% of investors said they won’t make new allocations to managers who have frozen or suspended assets in the past.

Meanwhile, investors said they have a preference for hedge funds holding liquid assets such as long/short equities rather than investments with long lock-up periods like private-equity stakes, Carter said.

The survey found 51% of investors are looking at increasing their allocations in long/short equity, 42% in event-driven funds, and 38% in emerging market investments.

Transparency, liquidity and regulation are top concerns for hedge fund investors, said Jon Hitchon, co-head of global prime finance at Deutsche who was also speaking to reporters at the firm's New York offices.

Meanwhile, the study found that 50% of investors view regulatory issues as the greatest challenge for the hedge fund industry this year. That number was up from 20% in last year’s, the bank said.