Financial Services Ireland

Survey

Shifting strategies in hedge fund industry

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As asset growth in traditional hedge funds from institutional investors continues to slow, hedge fund managers are pinning their hopes on the power of new products to attract investor assets and drive growth. However, many are underestimating the costs involved and the effect on margins, according to EY’s 2014 global hedge fund and investor survey: Shifting strategies: winning investor assets in a competitive landscape.

The trend of a gradual slowing of allocations to traditional hedge funds continues. In 2012, 20% of institutional investors that were surveyed expected an increase in their allocation while in 2013 that per cent declined to 17%. In our 2014 survey, 13% responded that they plan to increase their allocation to traditional hedge funds in the next three years, while 13% expect to decrease their allocation and 74% expect it to remain the same. In North America and Europe, those investors decreasing allocations outweighed those increasing by approximately 25%. Among those investors that would like to increase or maintain allocations, 40% say they face obstacles such as allocating too much to a single asset class.

Some of the key findings include:

  • New products can have a negative impact on margins
  • Regulatory reporting also hurts margins and is creating a barrier to entry
  • Protection from cyber-attacks a major concern for the industry
  • Smaller funds are having trouble raising capital to develop new products

Click here to read more or download the survey in full below.

Fergus McNally

FS Partner, Alternative Funds Leader
Fergus's Full Profile


2014 Global Hedge Fund and Investor Survey

Shifting strategies - winning investor assets in a competitive landscape

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