2014 global hedge fund and investor survey

  • Share

Our eighth annual survey of global hedge funds finds the focus of the industry shifting to growth after five years of volatile conditions. Given the increased competition for assets, managers are taking a wide range of paths to growth.

Methodology

  • 100 telephone interviews with hedge funds representing US$956b in assets under management
  • 65 telephone interviews with institutional investors representing US$1.3t in assets, with US$220b allocated to hedge funds
  • Of those 65 respondents, 14 represented funds of funds and 51 represented pensions or endowments

Managers with over US$10b in assets under management (AUM) are continually launching new products, such as separately managed accounts, liquid alternatives and long-only funds.

Investor appetite appears strong for these new products. However, the generally lower fee structures are affecting margins.

Midsize and smaller managers, meanwhile, remain focused on increasing growth via current offerings to existing clients and through reaching new investors.

Funds of funds (FOFs) are evolving as they battle to keep their share of the market through the use of registered products. More than half of our FOF respondents offer liquid alternatives, products which rely on sub-advisory relationships to be successful.

Managing growth

EY – Hedge fund growth strategies

Managers must beware the herd mentality when considering a new product launch. The global asset management industry can offer lessons about what happens when new product expansion happens too rapidly.

Also, in order to manage risk and address regulator expectations, it is critical to have the right infrastructure and controls in place for new initiatives and products. As always, the key issue is the responsibility of managers to act as stewards for their investors. Greater alignment of interests between managers and investors is an ongoing quest.