53% of surveyed managers have launched or may launch a 40 Act fund

There is a wave of hedge fund managers tackling the mutual fund industry. In the U.S., in a survey on '40 Act funds, Infovest21's "Hedge Fund Use of '40 Act Registered Investment Funds" survey found that 53% of the surveyed managers have launched a '40 Act mutual fund, are in the process of launching a '40 Act fund or are considering doing so. Another 25% are a subadvisor to a '40 Act fund or considering becoming a subadvisor. 8% have decided not to launch a '40 Act fund.

Lois Peltz, president of Infovest21, said, "The survey also found that over three-quarters of the managers said launching a '40 Act fund was worth the time and effort. The remainder of respondents said it was too early to tell."

She also observed, "Almost 30% of the respondents said they see subadvising '40 Act mutual funds as a way to build assets while another 26% said it was another way to broaden their investor base. Another 18% see '40 Act funds as a way to develop relationships while another 15% see it as way to differentiate from their peers."

Tom Florence, CEO of Denver-based 361 Capital, told Opalesque that mutual funds are here to stay.

"Mutual funds are a hard business, and they are a really different business, so hedge fund managers have to decide if they are going to go it alone or if they are going to do it with a partner who understands," he said, noting that there is an underserved investor marketplace for these products. "The challenge is there are only so many alternative assets - is there enough room for all of these funds? No. So you're going to see focus on quality and performance." (......................

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This article was published in Opalesque's New Managers a top-down monthly analysis, news and research publication on the global emerging manager space.