Sat, Dec 20, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

BNY Mellon's Pershing unit's new study reveals growth opportunity for hedge fund managers within separately managed account structures

Friday, October 08, 2010
Opalesque Industry Update: Pershing LLC, a BNY Mellon company, announced today the availability of a new report, Transparency and Liquidity: The Growth of Separately Managed Accounts in the Hedge Fund Industry. This independent study examines the emergence of separately managed accounts (SMAs) as increasingly popular hedge fund structures and the growth opportunities this trend presents to managers.

The study, developed with Greenwich Associates, a research-based strategy management financial services firm, details growing investor demand toward SMAs and provides guidance on how hedge fund managers can more effectively incorporate SMAs into their investment solutions and attract additional assets. The study, conducted by Greenwich Associates, is based on detailed interviews with 41 hedge fund and investment managers and 27 leading institutional investors.

Highlights of the study include the following:
* Input on Investment Decisions Drives Investors to SMAs – Nearly 63% of the investors who participated in the survey cited the opportunity to have greater influence on SMA strategy and input in the area of risk management as one of its primary benefits. This is a result of many investors having experienced significant losses in the past few years.

* Demand for Transparency Increasing – Approximately 45% of hedge fund managers reported that investors in pooled funds are pushing for higher levels of transparency. More than 50% of the investors pointed to daily transparency as a central reason for using SMAs, a benefit that many investors associate with better protection against fraud risk.

* Access to Liquidity Needed – 33% of the surveyed investors cited access to liquidity as an important benefit of SMAs. Almost 50% of hedge fund managers said they are experiencing pressure from their investors to eliminate lockup periods and redemption notice requirements while fewer managers report pressure from investors to reduce fees. Investors are reassessing the role of illiquid assets within their portfolios and seeking greater liquidity across all investments.

* Opportunity for Hedge Funds To Attract Additional Assets – Nearly 80% of the hedge fund managers interviewed currently offer SMAs as part of their investment solution and most confirm that SMAs are instrumental in attracting investor assets because they address investors' greatest concerns: transparency, liquidity, customized investments, and the ability to negotiate fees. However, despite having the necessary infrastructure, the study also reveals most managers are not actively promoting SMAs. More than 60% of the hedge fund managers cited administrative requirements and resource demands as serious disadvantages associated with SMAs, while 33% cited additional costs as a significant challenge.

"The increasing demand among investors for SMAs demonstrates the growth opportunity for hedge fund managers who incorporate SMAs into their investment strategy," said Craig Messinger, managing director at Pershing Prime Services. "Hedge fund managers should consider strengthening business operations internally and leveraging the full capabilities of their prime brokers to meet the growing investor demand for greater transparency, liquidity and flexibility," added Messinger.

John Colon, managing director at Greenwich Associates, said, "Prime brokers can help hedge fund managers develop efficient offerings that reduce administrative burdens while meeting investors' current needs. As investors gravitate to the SMA structure, growth-minded hedge funds managers seeking new assets and longer-lasting relationships with their clients will look to abandon older 'black box' models in favor of more tailored offerings."

(Press release) Pershing Prime Services delivers an unconflicted, comprehensive suite of global prime brokerage solutions, including extensive access to securities lending, dedicated client service, robust technology and reporting tools, worldwide execution and order management capabilities, a broad array of cash management products, and the integrated platform of BNY Mellon. Pershing Prime Services is a service of Pershing LLC. A copy of Pershing's new independent study and additional information about Pershing Prime Services' capabilities and solutions can be found by visiting www.pershingprimeservices.com.

Pershing LLC is a leading global provider of financial business solutions to more than 1,150 institutional and retail financial organizations and independent registered investment advisors who collectively represent approximately five million active investors. Located in 21 offices worldwide, Pershing and its affiliates are committed to delivering dependable operational support, robust trading services, flexible technology, an expansive array of investment solutions, practice management support and service excellence. Pershing is a member of every major U.S. securities exchange and its international affiliates are members of the Deutsche Borse, the Irish Stock Exchange and the London Stock Exchange. Pershing LLC is a BNY Mellon company.

BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has $21.8 trillion in assets under custody and administration and $1.0 trillion in assets under management, services $11.6 trillion in outstanding debt and processes global payments averaging $1.5 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation. Additional information is available at www.bnymellon.com. Source
-KM

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Investing - Big hedge funds win again on PetSmart, Riverbed, RBS sells real estate loans to hedge fund Cerberus, Talisman energy speculation: Which hedge funds could benefit?[more]

    Big hedge funds win again on PetSmart, Riverbed From CNBC.com: Another week, another set of wins for activist investors. On Sunday, pet supply retailer PetSmart agreed to the largest leveraged buyout of the year at $8.7 billion. Hedge fund firm JANA Partners had been pushing for a sale a

  2. Outlook - Hedge fund manager who remembers 1998 rout says prepare for pain, Bond guru Bill Gross predicts U.S. economic growth to dip to 2%[more]

    Hedge fund manager who remembers 1998 rout says prepare for pain From Bloomberg.com: Stephen Jen landed in Hong Kong in early January 1997 as Morgan Stanley’s newly minted exchange-rate strategist for Asia. He was soon working around the clock when investors began targeting the region’s

  3. Investing - Hedge funds get boost from healthcare in 2014, Paulson & Co takes stake in Salix on heels of inventory issues[more]

    Hedge funds get boost from healthcare in 2014 From Valuewalk.com: The healthcare sector started the year on a turbulent note, as stocks of many major biotechnology companies were battered. However, most of the players in this sector have bounced back. The BarclayHedge Healthcare & Biotec

  4. Comment - High fees and low performance hit hedge funds[more]

    From FT.com: Disenchantment over high fees and lackluster performance may finally be turning the tide against hedge funds, fresh data suggest. Despite generally weak returns since the global financial crisis, hedge funds have enjoyed positive net inflows every year since 2010. This helped assets und

  5. Performance - Lansdowne, Man Group, other hedge funds profit from shorts in oil, Turmoil boosts hedge funds that bet against Russia, oil, CTAs post strongest returns since December 2010[more]

    Lansdowne, Man Group, other hedge funds profit from shorts in oil From Valuewalk.com: The rising short interest in oil companies implies that the worst for oil is yet to come. Data from Markit shows that short exposure in energy sector of S&P 500 is still looming close to the highest mar