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Bailey McCann, Opalesque New York:

A rising number of newly launched hedge funds are employing non-equity-based investment strategies, according to The Seward & Kissel 2016 New Hedge Fund Study, an annual analysis of new hedge funds, from law firm Seward & Kissel. Data in the report show that the portion of new hedge funds using non-equity-based strategies increased to 35 percent in 2016, up from 20 percent in 2015.

"The rising popularity of non-equity-based funds is the story of 2016. New fund managers obviously reacted to a big shift in investor appetites," said Steve Nadel, author of the report and Seward & Kissel Investment Management Group partner.

The 2016 numbers indicate that as non-equity funds become more prevalent, investors are beginning to extract from them concessions similar to those they have previously won from equity-based funds. The percentage of non-equity funds offering special "founders" terms to investors jumped from 29 percent in 2015 to 36 percent in 2016.

Non-equity strategies are defined in the survey as multi-strat funds, credit funds, and some quant funds. All of these fund types have seen a significant spike in investor interest in recent years and it is starting to show in subscription terms which are becoming more accommodating to investors. According to the report, not a single non-equity fund offered tiered management fees to their founders round investors in 2015, but by 2016 25 percent of them did.

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