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Sinopia: Institutionalization `huge opportunity for hedge funds`, industry becomes more capital-intensive
Matthias Knab reports "live" from the GAIM Asia conference in Hong Kong: Patrice Conxicoeur, CEO of Sinopia Asset Management, a quant manager which is part of the HSBC Group, says it is an accomplishment for the industry that mainstream consultants have started to focus on hedge funds and recommend their clients adding hedge funds to the portfolio mix. While the hurdle has gone up for start-ups and entrepreneurs, this would still represent an opportunity to grow, even though large hedge funds (> $1bln) and fund of hedge funds seem to profit most from the institutionalization. For start-ups, the parameters for set up the shop have changed; most importantly the capital requirements are much higher. Today, a start up hedge fund would be well advised to have a multi-year business plan and a sound financial base.
Conxicoeur cited a PWC study which highlighted that institutions, "when deciding whether to stick with a HF manager, 41% of them point at risk management and transparency as a factor, 40% at performance.” Of course, without any performance, a fund will have a hard time collecting assets. However, "institutions are aware that performance is not there all the time" and they know that "hiring and firing managers is expensive"; they therefore tend to stick with a fund, if the firm meets their risk management and transparency needs. The demand for more...................... To view our full article Click here
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