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Alternative Market Briefing

Tenth Towers Watson alternatives survey says few funds of hedge funds offer credible capability

Tuesday, August 27, 2013

Beverly Chandler, Opalesque London:

The Towers Watson Global Alternatives Survey, produced in conjunction with the Financial Times and in its tenth year, revealed that pension fund alternative assets allocations are now nearly 20% of all pension fund assets across the globe, increasing by 5% from 15 years ago.

Commenting specifically on key trends in hedge funds, the survey said: "The Fund of Hedge Fund (FoHF) industry continues to adjust to the new normal, with FoHFs increasingly working with investors in some form of customised or bespoke manner. Continuing downward pressure on the FoHF fees has resulted in meaningful reduction of the average manager fee rates, although the total fee burden for institutional investors remains significant".

The survey found that institutional investors continue to be discerning about what they want from the hedge fund part of their portfolios. "Which is" the survey says, "low correlation to traditional markets, greater transparency, appropriate liquidity, alignment and appropriate fees."

The survey found that there was less of a take it or leave it attitude between FoHFs and their investors and an increasingly accommodative approach to investor requirements.

Looking forward, Towers Watson believes that only a small number of FoHFs offer a credible capability so they expect more co......................

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