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Alternative Market Briefing

Rothstein Kass: Separate accounts and seeding are becoming significantly important in the hedge fund world

Thursday, April 26, 2012

Benedicte Gravrand, Opalesque Geneva: According to Rothstein Kass’ sixth annual survey of the hedge fund industry, one issue that is striking is that separate accounts and funds of one (aka managed accounts) are gaining ground and now nearly equal the number of offshore products. Furthermore, more than half of the funds polled would consider creating a separate account for investors who’d put in $50m or more.

The survey, out this month, was conducted in January 2012 among 400 hedge fund firms, representing more than 770 vehicles, and based primarily in the U.S.

And UCITS-compliant funds, popular in Europe, are not quite making it in the U.S. As this vehicle does restrain investment capabilities a great deal, this is not surprising.

Another unsurprising fact is that there are still less emerging hedge funds than there were prior to 2008; pre-2008 was a boom period for a young and carefree industry. No longer.

At the same tine, almost 80% of respondents believe seeding is critical to a successful launch this year.

Rothstein Kass has seen a proliferation of seeders and early-stage allocators within the last 12 to 18 months. Meredith Jones, director at Rothstein Kass expects this to continue, as emerging managers are a good source of alpha, which investors seek, and are more dependent on seed capital. "In fact, we expect the industry to find more ways to get institutional capital to emerging funds, perhaps through separate ......................

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