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Our sixth annual survey of the hedge fund market is our most extensive yet.

This year’s survey includes responses from 100 of the largest hedge fund managers in the world and 50 major institutional investors with more than US$715 billion in assets (US$190 billion of which is allocated to hedge funds).

We asked them about manager selection, headcount, infrastructure, outsourcing, regulation and reporting, compensation, fees and expenses and the future of the hedge fund industry. Here are some of our key findings:

  • New regulations and compliance requirements are taking a financial toll on hedge funds, although there is enormous skepticism about their effectiveness in both protecting investors’ interests and preventing another financial crisis.
  • Hedge fund managers and investors remain divided on compensation-related issues, although these differences do not seem to be affecting fund selection or redemptions.
  • Additional transparency is important to investors, but they do not want these costs passed along to them.
  • Investor support for emerging and start-up funds is increasing. The largest managers are not necessarily gathering all the assets, and a significant majority of funds say that they are investing in a “fund of one.”
  • The Eurozone crisis has caused investors to ask questions about exposure, liquidity risk and counterparty risk. Practices have changed in some cases, but there are no signs of a wholesale or permanent withdrawal.

Welcome from Ratan Engineer and Arthur Tully

Ratan Engineer“The response to our survey has been overwhelming, not only in numbers — 100 of the world’s largest hedge fund managers and 50 major institutional investors with some of the largest allocations to hedge fund assets — but also in the depth, richness and color of the comments and feedback. We believe it makes for our best survey yet as we continue to make our contribution to, and investment in, this varied, vital and vigorous industry.” Ratan Engineer, global leader, Asset Management practice

Arthur Tully“A particular word of thanks to our senior panel of managers and investors, who helped design the questions and shape the survey, and without whose depth of understanding of the industry and readiness to participate, this study would not have been possible. If this report plays even a modest part in bringing the manager and investor communities closer together, it will have served a useful, even powerful, purpose.” Arthur Tully, co-leader, Global Hedge Fund services

Get all the details from our Global hedge fund and investor survey 2012:

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