Mon, Sep 23, 2019
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
New Managers March 2019

PERSPECTIVES: Hedge fund managers and service providers rethink business models in the era of low fees

 

Hedge fund managers and service providers rethink business models in the era of low fees

Delegates at the recent Opalesque Cayman Roundtable say that managers and service providers are rethinking business models in response to growing pressure to cut costs. As a result, the industry is experimenting with new product types, investor terms, and fee structures that are designed to provide better alignment of interests.

Product innovation Caroline Heal a Partner at law firm Walkers says that she's seeing emerging managers come to market with founders classes that have special liquidity rights and fee terms as well as tiered management and performance fees linked to AUM. Managers are also looking at fund structures. New funds are being created with less frequent redemptions and differing allocation structures, including rolling commitments similar to the capital calls that are common in private equity. Additionally, some managers have restructured existing products in order to better align them with investor expectations.

"It's interesting to see the way managers are adapting to the changing marketplace," Heal said. Back office re-vamp The back office is also being updated and streamlined in response to regulatory and investor pressure. More emerging managers than ever before are outsourcing some if not all of their operations. "Outsourcing is seen as more of a positive by investors and managers nowadays," said Craig Smith, a Partner at PwC Cayman Islands. "When we first saw this happening 7-10 years ago, it was met with a certain degree of skepticism.

But the strength and professionalism of the ecosystem of outsourced CFOs, COOs, and other functions have helped." Smith adds that outsourcing is often more cost-efficient for emerging managers that are still building their businesses. Outsourcing to known players in the industry can also streamline due diligence because investors are already aware of most of......................

To view our full article please login

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

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Albright Capital builds on emerging markets impact strategy, signs on to IFC principles[more]

    Bailey McCann, Opalesque New York: Albright Capital has adopted the International Finance Corporation's Operating Principles for Impact Management. The firm has also developed its own impact measurement system as part of the implementation of the principles. The IFC's principles were

  2. Investing: Hedge funds getting burned as growth stocks trounced by value, Why investors are prioritizing health care in a big way, Fannie, Freddie soar as hedge funds score wins on two fronts[more]

    Hedge funds getting burned as growth stocks trounced by value From Bloomberg: A hedge-fund favorite is rapidly losing ground in the stock market just as one of the industry's least-loved sectors picks up. Growth stocks, generally companies that are seeing rapid profit increases, have drop

  3. PE/VC: Supersized unicorn: Root Insurance leaps to $3.65bn valuation with $350m round[more]

    Root Insurance is now valued at $3.65 billion after a $350 million funding round - the largest single venture capital round ever in the state. The 3-year-old auto insurer, now the startup with the highest valuation of any in Ohio, has raised a cumulative $523 million in VC and another $100 mi

  4. Testing hedge performance when stocks crash[more]

    Bonds have historically been a reliable buffer for stock exposure. But low yields and potential reversion to a more positive stock/bond correlation would likely translate to less protection. Gold has been a solid crisis hedge but has experienced long stretches of negative inflation-adjusted returns.

  5. PE/VC: The FBI is investigating a venture capital fund started by Peter Thiel for financial misconduct, Why venture capital firms need more women partners and entrepreneurs[more]

    The FBI is investigating a venture capital fund started by Peter Thiel for financial misconduct From Vox: Federal investigators are probing the conduct and practices of Mithril Capital, a venture capital firm co-founded by Peter Thiel, Recode has learned. US officials - including t