growth 2020 slideshow: the changing chemistry between hedge funds and investors
TRANSCRIPT
Hedge Funds Growth 2020: The Changing Chemistry
Between Hedge Funds and Investors
November 2016
Aranca Research, supported by FIS
Aranca Research, Supported by FISGlobal Survey
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APAC
EMEA
Americas
Global Survey
Hedge funds
High net worth investors
Institutional investors
Influencers 258 participants
Top Challenges Facing the Hedge Fund Industry
31%Attracting
new clients
31%Investment
opportunities
42%Fee pressure
49%Regulatory change
49%Growing AUM
All respondents: What are the top three challenges faced by the hedge fund industry?
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Key Findings …
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Different hedge fund investors have strikingly different objectives.
Fund managers’ planned range of products/strategies do not
tally with investor interest.
Investors perceive disruptive, innovative strategies to be enablers of growth.
Regulation is hampering investment strategies.
Key Findings …
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Fee structures will impact fund profitability based on performance/asset
growth.
Demographic shifts will change the way hedge funds attract new
business.
Hedge funds must improve their technology to support growth
and client relationships.
Top Trends Driving the Hedge Fund Industry
30%Volatility
dampening
41%Niche
specialism
54%Risk
reduction
59%Return
enhancement
80%Portfolio
diversification
All respondents: Why have investors chosen to invest in a hedge fund?
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“Hedge funds provide an excellent
investment opportunity. It provides us
diversification while maximizing returns
and minimizing risk.”
EVP, U.S.-based institutional investor
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Collectively, investors show a preference
for the following strategies:
• Equity long/short (67%)
• Market neutral (40%)
• Event driven (38%)
Funds Should be Flexible in Their Investment StylesIf They are to Capture Client Capital …
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Hedge funds future plans are primarily:
• Separately managed accounts (31%)
• Equity long/short (27%)
• Commodity trading advisor/managed
futures (24%)
This suggests that many funds must be
flexible in their investment styles if they
are to capture client capital.
Funds Should be Flexible in Their Investment StylesIf They are to Capture Client Capital …
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Changing Investor Expectations …
OptimizeInvestors are attracted to innovative investment strategies and the
niche specialisms that will optimize their investment portfolios.
UnifyInvestors and regulators expect a unified view of risk and transparency, timely
reporting and robust operational processes.
StrengthenInvestors and regulators are driving hedge funds to strengthen their
operations based on fee pressures and compliance pressures.
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Changing Investor Expectations …
OptimizeCreate innovative investment strategies with global multi-asset class
trading and portfolio management.
UnifyAchieve a unified view of risk across the front and middle office for improved
risk management and investment decision making.
StrengthenCombine infrastructure and resources onto a single platform for economies
of scale and reduced costs. Leverage expertise with managed services.
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Technology Capabilities Help Solve Challenges …
Market data
and
connectivity
Investment
risk
management
Regulatory
reporting
Trading and
order
management
Portfolio
management
Investment
operationsInvestment
operations
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Empower Growth by Leveraging Flexible Technology
Mid-tier boutique
hedge funds
Start up and
early stage
hedge funds
Larger institutional
hedge funds
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Appendix: Respondents by Role
63%Investment
professionals
33% 15%Risk
professionals
258 participants: 163 investment professionals, 84 operations professionals, 38 risk professionals, 26 influencers,
65 others
Note: Overall respondent total and individual functional totals do not tally as respondents opted for multiple functional roles.
.
Operations
professionals
10%Influencers
professionals
25%Other
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