Mon, Jul 24, 2017
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Rothstein Kass hedge fund manager survey finds growing optimism amid intensifying regulatory and institutional focus

Wednesday, April 20, 2011
Opalesque Industry Update - Fewer than One-Third of Managers Polled Anticipate a Difficult Year for the Sector

Rothstein Kass, a leading professional services firm to the alternative investment community, has published its fifth annual report on hedge fund industry trends. “2011 Hedge Fund Outlook: Brighter Days Ahead?” features the findings of an internet survey of 313 hedge fund managers on their views regarding subjects from capital raising intent to the intensifying regulatory agenda, including the impact of the Volcker Rule on proprietary trading operations at large financial institutions.

The survey was conducted in January 2011, with roughly 70 percent of participants reporting assets under management (AUM) under $500 million, and the balance reporting AUM in excess of $500 million. Key findings include:

• Roughly one-third of hedge fund managers believe 2011 will be a difficult year for the hedge fund industry, a marked improvement from one year ago, when almost 70 percent predicted a rough year ahead

• Nearly 75 percent of survey participants expect that there will be more hedge fund launches in 2011 than in the prior year

• More than 60 percent of managers expect that there will be fewer hedge fund closures in 2011 than in 2010

• 62 percent of survey respondents also agree that as hedge funds add staff, they will benefit from an inflow of talent from other segments of the financial services industry

• Funds launching in 2011 will be more dependent on seed capital than in 2010, according to more than 62 percent of managers polled

“Even at the height of the crisis, our research found that the hedge fund community remained confident in its long-term positioning. Still, in the face of market uncertainty and regulatory challenges, most managers acknowledged the many obstacles ahead. Over the past two years, the sector has again shown its resilience by adapting to meet the evolving needs of its investors. More than 70 percent of hedge fund managers anticipate that institutional investors will be the dominant source of new capital in 2011. While this may not seem surprising today, it is in stark contrast to our 2007 survey results. At that time, only 20 percent of respondents reported that institutional money would come to dominate the industry,” said Howard Altman, Co-CEO of Rothstein Kass and Principal-in-Charge of the firm’s Financial Services Group.

“Those firms that took the lead in developing and implementing institutional-quality operational practices – from succession planning to reporting – are now benefiting from increasing allocations from pension and defined benefits plans seeking to overcome their own funding shortfalls deepened by the crisis.”

“2011 Hedge Fund Outlook: A Brighter Day?” finds the overall trend toward the institutionalization of the hedge fund industry intensifying:

• More than 85 percent of hedge fund managers expect institutional investors to be more averse to high concentrations of illiquid portfolio assets

• General partner investment will be a greater consideration for investors evaluating hedge fund allocations, according to three-quarters of respondents

• Over 80 percent of survey participants expect institutional investors to continue to exhibit a preference for allocations to larger hedge funds

• Nearly 65 percent of managers polled expect that hedge funds will more frequently offer special terms to pension funds and sovereign wealth funds

“The institutionalization of the hedge fund industry is likely to accelerate in coming years. Though regulatory initiatives have played a role, the push for greater communication and transparency is still predominantly a market-driven phenomenon. The fiduciary responsibilities of institutional advisors continue to inspire enhancements to due diligence processes, as investors now more commonly look beyond performance at a range of considerations, including succession planning and operational and reporting practices,” said Mr. Altman.

“Enhancements in these areas have helped to restore investor confidence, and the regulatory focus is likely to persist. When we commissioned our first industry survey in 2007, less than 10 percent of respondents expected significantly more industry regulation. As an ever-increasing portion of “Main Street” has gained access to alternative products through their pension plans, regulatory scrutiny has logically intensified. While these efforts have helped to dispel the notion that the hedge fund industry is unregulated, hedge fund managers have also relied on an enhanced communications focus to dispel other, long-standing misconceptions regarding the sector and its practices.”

The Rothstein Kass “2011 Hedge Fund Outlook” features an insert that highlights notable contrasts across five years of survey data. Among notable findings:

• In 2007, only 20 percent of managers expected institutional money to dominate the hedge fund sector. More than 70 percent of managers believe this to be true today

• More than three-quarters of managers expect to increase AUM in 2011, with nearly 60 percent indicating that they will raise assets by 25 percent or more. In 2010, 67 percent of managers were expecting to raise significant new capital, with only 32 percent expecting to increase assets by 25 percent or more. In 2009, nearly all survey participants expressed a desire to source significant new investment capital

(press release)


Rothstein Kass is a premier professional services firm that has served privately held and publicly traded companies, individuals, and families for more than 50 years. Rothstein Kass is consistently ranked as a top CPA firm to the alternative investment industry in independent, third-party surveys. The Rothstein Kass Financial Services Group provides services to many high-profile and respected clients including hedge funds, fund of funds, private equity and venture capital funds. www.rkco.com


See recent relevant article:
Opalesque Exclusive: Gottex, other hedge fund managers optimistic about business objectives but wary of uncertainties and ready for more consolidation Source

Bg

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. Launches - Crypto boom: 15 new hedge funds want in on 84,000% returns, Crypto madness is striking VCs as Union Square analyst leaves to start new fund[more]

    Crypto boom: 15 new hedge funds want in on 84,000% returns From Forbes.com: With 43 projects raising $1.2 billion in initial coin offerings since May 1, according to Nick Tomaino's The Control, and with stratospheric returns for so many ICOs -- 82,000% for Ethereum, 56,000% for IOTA, 44,

  2. FinTech - The machines are coming... Elon Musk's grim warning, Tezos' $232 million ICO may just be the beginning, A gentle introduction to Initial Coin Offerings (ICOs), Billion dollar tokens, ICOS & crazy market swings WTF is going on!?, How AI is changing the way we invest, How the tech revolution is bringing flip-flops and beanbags to Wall Street, A 'machine-learning' approach to venture capital[more]

    The machines are coming... Elon Musk's grim warning From Tenplay.com.au: Tesla chief Elon Musk has called on US Governors to take 'decisive' action to curtail "the greatest risk we face as a civilization": Artificial Intelligence, or AI. Speaking at a meeting of the National Governor Ass

  3. News Briefs – Sears inks $200 million credit line from CEO Eddie Lampert's hedge fund, shares jump 9%, Rwanda: Global hedge fund to increase investments[more]

    Sears inks $200 million credit line from CEO Eddie Lampert's hedge fund, shares jump 9% Sears Holdings has landed a fresh line of credit, valued at $200 million, from its CEO Eddie Lampert's hedge fund, the retailer said Monday. Sears' stock climbed about 9 percent higher Monda

  4. Despite current limits, robo-advisors will be preferred investment solution for retail, gain importance for affluent and high net worth[more]

    Matthias Knab, Opalesque: Flynt, a Swiss FinTech focusing on proprietary technology platform for private and institutional clients, has published a brief paper on "Investing in the world of robo-advice and passive instruments". As investors will become more reluctant to pay for investment advi

  5. Investing - Hedge fund CQS favors structured credit, Direct lending funds' fading all-weather appeal, Funds hunt for cracks in most-prized US shopping malls[more]

    Hedge fund CQS favors structured credit From BArrons.com: A hedge fund manager that can invest across the investment landscape says in his latest semi annual report this week that he's finding opportunities in structured credit -- particularly the shorter term, floating rate kind. Exampl