2010 RSM and Greenwich Associates Hedge Fund Industry Survey Report
INSIGHT ARTICLE |
“The times are changing. Interest in regulatory compliance is at an all-time high. And although it’s easy for organizations to lose focus when attention seems directed toward a couple of high-profile industries, establishing an effective, comprehensive corporate compliance process is an imperative.”
RSM recently teamed with Greenwich Associates for a research study focusing on hedge funds with $100-500 million in assets under management (AUM). This group represents the highest potential for growth, yet remains the most challenged when it comes to fundraising.
- Offers insight into the capital-raising activities of hedge funds
- Provides peer benchmarks on sales and service infrastructure
- Identifies best practices in reporting and transparency
Our research found that nearly 95 percent of the interviewed hedge funds consider themselves prepared to meet the demands of institutional investors as prospects and clients. A closer analysis of the results, however, suggests that some of these hedge funds may be overestimating their preparedness.
Institutional investors have heightened expectations concerning due diligence, risk management, overall transparency, client service and liquidity. When compared to traditional investment managers, our survey found :
- There are significant gaps in resources (and expectations for resource requirements) between hedge funds that have a higher proportion of institutional clients, versus those funds focusing more on high-net-worth investors.
- A relative lack of resources in critical areas of sales, investor service and reporting puts a meaningful share of hedge funds at a competitive disadvantage in pursuing institutional assets. These firms may need to make strategic decisions about their target client base and focus on core investment management competencies.
What does this mean to you?
From an Alternative Investment Fund manager’s perspective, the competition for assets continues to intensify. The survey shows that while 92 percent of these hedge fund managers claim to be prepared to meet institutional investor demands, their organizations may not reflect that confidence in reality.
This could be a call to action to examine these issues and explore solutions to address them. We would be happy to share what we see across our hedge fund client base in terms of best practices and vulnerabilities.