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In last year’s survey, managers reported a continued trend of confidence in the functioning of financial markets. The main concerns entering 2014 revolved around Fed tapering and interest rate increases, though there was general agreement that most central banks were doing a decent job. Managers also identified equity markets as the next bubble. One year on, equity markets have continued to trend upwards while the impact of the taper has been limited and rate increases remain on hold.

This year, consensus reigns as there appears to be little divergence in managers’ views of markets. That said, our survey captures some negative trends in liquidity and the availability of financing. U.S. fixed income has replaced equity markets as the most cited area for the next bubble. AIFMD begins to show its impact on managers’ marketing efforts in Europe, while the JOBS Act appears to have offered little incentive for hedge funds to advertise.

Selected Highlights:

• Signs of concern? Managers say that liquidity and financing are becoming more challenging. The percentage of managers reporting the worsening availability of financing more than doubled (17%) versus last year's survey (8%) and tripled (5.5%) from our 2013 survey. A third of respondents said that liquidity in their markets was worse than last year.
• Somewhat surprisingly, despite the uproar about high-frequency trading (HFT), 82% of managers said HFT has no impact on their strategy’s performance (vs. 62% in our 2013 survey). Those believing HFT has a negative impact dropped from 27% in 2013 to only 11% in 2015.
• 87% of managers say new AIFMD requirements create significant challenges for their firm. A majority (59%) reported that they are becoming fully reliant on reverse solicitation in European countries. Smaller, younger firms are impacted the most.
• Industry transparency continues to improve: 61% of managers report sending risk data to independent risk aggregation firms. This positive trend is illustrated in our annual survey, as only 49% and 52% reported the practice in the 2013 and 2014, respectively.
• Despite the headlines around the growth of liquid alternatives, the survey finds no change in the number of hedge funds offering UCITS or 40 Act products. The 19% offering UCITS and 15% offering 40 Act products is in line with last year’s survey (19% and 12%, respectively).
• Santa’s ‘Naughty or Nice’ list: when asked whether some world leaders should be getting an iPhone 6 or a lump of coal, Fed Chair Janet Yellen topped the iPhone list (68% positive). The U.S. Congress received a stocking full of coal (95% negative), which speaks volumes considering President Putin actually received less coal (93% negative).

(press release)
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