Hedge fund managers and investors are always looking for increasing ways to expand their portfolio and utilize a growing net worth pool to capitalize on growing investments. The yearly Hedge Fund and Investor Survey by EY helps investors and hedge fund managers localize and identify growing trends in the industry. This comprehensive analysis facilitates improved investments, enhanced allocation schemes and aggressive policy analysis and change. Here is a closer look at EYs 2014 Hedge Fund and Investor Survey:
Methodology of the 2014 Survey
The primary method of survey revolved around telephone interviews, where both fund managers and institutional investors were contacted to ask about their preferences and fund representations. Here is a summary of the surveys methodology:
- 100 hedge fund managers were surveyed through telephone interviews
- 65 institutional investors were surveyed through telephone interviews
- The hedge fund managers represented assets under management (AUM) over US$950 billion in value
- Institutional investors represented a greater valuation of assets, valued at US$1.3 trillion
- Institutional investors also represented hedge funds but allocated less than US$250 billion to it
Both hedge funds and institutional investors are witnessing increases in profitability as managers look for more long-term products offering higher liquidity. However, hedge funds managers and institutional investors who have less than US$10 billion in their AUM are not following this same trend but rather maximizing current offerings to clients.
One interesting conclusion from the 2014 Hedge Funds and Investor Survey is the increase in interest rate of funds of funds (FOF). Numerous hedge fund managers and institutional investors, up to 50% of those interviewed, offer funds of funds. More managers and investors are aligning their interests in order to hedge their risks and ensure proper regulation. With the right infrastructure in place, this becomes easier and highly beneficial during product launches.
Expense of Funds and Investments
Expense ratios used to be a top priority for fund managers and investors but it seems that their interest in the expense ratios is declining. In truth, this comes as no surprise since the last 3 quarters have yielded declining expense ratios. However, this does not translate to greater satisfaction. With greater stress placed on regulations and ensuring compliance fund managers and investors find themselves unable to reduce business costs and thus calculating reduced profitability.
Improvements in Client Focus
While fund managers and investors never took a backseat to the needs of their clients, it seems they are now showing an increased determination to listen and implement client feedback. For example, they have made their expenses more transparent, are answering a greater number of feedbacks, generating cost shares and even head-counting.
Growth in the Use of Technology
While there may still be numerous breaches in hedge funds and large-scale investments, many which are in the news, fund managers and investors are ramping up their security systems. Increases in regulations will help expedite improvements in security implementations.
A growing number of medium and small fund managers and investors are using the cloud environment to share data over short distances but the security psychological barrier is proving problematic. Considering the amounts invested, online security is becoming a growing concern, particularly on cloud platforms.
Chris Turner is a versatile content writer with a passion for technology, finance, Investing and trading. He writes extensively on the subjects of Trading, Investing, Bitcoin, Forex trading, investing and general finance. He is writing and providing advice, education and encouragement to budding investors and traders, on Hedge Fund and alternative investments and other emerging financial trends. He is a contributor writer for HedgeThink.com and TradersDNA.com.