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Stuart Feffer From Kirsten Bischoff, Opalesque New York:
While investors are still on edge about many things in the markets (QE2, commodities volatility, sovereign debt, etc), we have heard from managers that investors have been showing a slow but steady increase in risk appetite. There are a few likely reasons for this. Widely it is observed that investors are realizing markets will remain volatile in the coming years, and for many (ie, pensions and endowments) staying on the sidelines is not an option. It is also possible that investors re-entering the markets through hedge funds may be less averse to market risks because they feel more confident about controlling operational risk.
In fact, by listening to investors demanding the utilization of third party administration, multiple prime brokers, and increased reporting and transparency managers may, in the long run, have secured additional leeway for taking more investment strategy risks.
Service providers are continuing to see funds open their arms to outsourcing; a move that is attributed to both investor demand and cost efficiency. Even the largest hedge fund in the world ($75bn Bridgewater) has been considering outsourcing its back office (currently staffed by 200 people). While it is believed that a move like that by Bridgewater could set a trend, it is something that some administrators are already seeing, Stuart Feffer, C...................... To view our full article Click here
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