The hedge fund industry is transforming, with managers increasingly focused on customised products and solutions, new investors, and emerging markets. This is the conclusion of the latest report by KPMG International, the Managed Funds Association (MFA), and AIMA.
The key findings of the report entitled “Growing Up - A New Environment for Hedge Funds” include:
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A majority of hedge fund managers expect a significant shift in their primary sources of capital to pension funds over the next five years
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Almost 70% of managers said they offer, or plan to offer, custom investment solutions
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A vast majority of managers anticipate using specialised fee structures to attract investment
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More than four in 10 managers expect to change the mix of countries where they invest, with more than a third targeting emerging and frontier markets
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Regulation is seen as the biggest threat to the growth of the hedge fund industry, as cited by more than three-quarters of managers
Jack Inglis, AIMA CEO, said: “The global hedge fund industry, which has grown by over 10% a year since the financial crisis, is well positioned to maintain this growth trajectory over the next five years. The research shows that as the industry continues to evolve and mature, a combination of institutionalisation and customisation will effect positive change and encourage ever greater allocations from pensions and other institutional investors.”
“Our survey shows the transformative change that is impacting every aspect of hedge fund management, from product mixes and fee structures through to markets and investor types,” said Robert Mirsky, Global Head of Hedge Funds, KPMG International. “The managers we spoke to around the world recognise that the industry must continue to adapt and adjust strategies in order to thrive.”
The report finds further evidence that the growth of the hedge fund industry is being driven today largely by institutional investors rather than individuals. A majority of managers expect a significant shift in their primary sources of capital, with most saying that pension funds – both corporate and public – would be their primary sources of capital by 2020.
“The days of hedge funds simply being an investment tool for high-net worth individuals are over,” said MFA President and CEO Richard H. Baker. “Institutional investors like pension plans, university endowments, and charitable organisations now make up nearly 65% of the industry’s assets. These diverse partnerships help local economies and underscore the important role alternatives play at both the macro and micro levels.”
Full press release
Full report
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