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Alternative Market Briefing

Other Voices: Hedge fund launches in 2021: obstacles and opportunities

Tuesday, February 23, 2021

By Aaron Steinberg, Head of Prime Services Sales and Relationship Management at BNY Mellon Pershing

There were 42 launches in Q3 of 2020-the lowest of any fiscal quarter of the last five years-and of those launches, very few had a sizeable AuM. However, according to new research by HFM, almost three in five investors view hedge funds more favorably than before the pandemic-a higher figure than any other asset class. The same report shows that 76% of investors feel hedge funds are delivering value for money during these exceptionally challenging times. Growing consensus dictates that as a response to 2020's volatility, institutions are expected to implement or even increase allocations to hedge funds as a source of downside protection.

Despite this, there are real and unique obstacles for new managers hoping to launch a hedge fund in the current environment.

For example, while investors are indeed showing increased demand for hedge funds, HFM's September report "Capital Raising in a Crisis" shows that less than half of surveyed investors expected to hold face-to-face meetings with managers in Q4, preferring to increase existing mandates instead of creating new ones. Additionally, for the minority that were willing to have new conversations, virtual ODD still remains ......................

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