What is the Hedge Fund of the Future?
INDUSTRY LEADERS PUT FORWARD VISION OF HEDGE FUND FIRM OF THE FUTURE
16 April 2018
Some of the most senior men and women in the global hedge fund industry have put forward their collective vision of the hedge fund firm of the future in a major new report published today by the Alternative Investment Management Association (AIMA), the global representative of alternative investment managers.
The paper, ‘Perspectives: Industry Leaders on the Future of the Hedge Fund Industry’, is sponsored by Aberdeen Standard Investments (ASI), the global investment company.
It is based on candid and wide-ranging conversations with 25* of the leading figures in the industry, who collectively account for over 300 years of industry leadership and manage in excess of $500bn in hedge fund assets.
The paper finds that hedge fund firms are rapidly transforming their product offerings and how they operate in order to meet the changing needs of investors. These changes include adopting artificial intelligence and other disruptive technologies and partnering with clients on responsible investment mandates.
Larger firms are increasingly becoming fully diversified asset managers with multiple product offerings at varying fee levels. The paper also highlights how many firms are changing themselves internally, with a growing number of managers becoming more data-focused, relying more on teams of highly quantitative talent such as physicists or engineers and less on one or two ‘star’ traders.
The interviewees also discuss, among other themes, fees; succession planning; employee diversity; and “alpha”, “smart beta” and “alternative beta” based client solutions.
AIMA’s CEO, Jack Inglis, said: “This paper shows that the pace of change and innovation in the hedge fund industry is only going to increase. Hedge fund firms are transforming themselves in order to thrive in tomorrow’s market place. Hedge fund firms have always embraced disruption; the leaders with whom we spoke are committed to making the most of the coming changes in the financial world and are enthusiastic about the opportunities to deliver for their clients.”
AIMA’s Global Head of Research, Tom Kehoe, the author of the paper, added: “The hedge fund industry was born of disruption. The leaders with whom we spoke were not only confident in their ability to adapt to the changes that they face, but are at the forefront of this transformation. From the implementation of new investment solutions to the implementation of cutting edge technology to stay ahead of the pack, hedge fund firms are meeting the challenge. In the coming years, hedge fund firms will continue to refine not just what they deliver to their investors, but how they deliver it.”
Aberdeen Standard Investments’ Global Head of Client Driven & Multi-Manager Solutions, Andrew McCaffery, one of the participants in the paper, commented: “The paper demonstrates the growing voice of the client. This is reflected in the range of products and the solutions that are required from, and provided by, hedge funds plus the recognition of the value for money demanded in delivering the solutions. It also shows the fundamentally Darwinian nature of the hedge fund industry whereby the firms which adapt to clients’ needs and grasp technological change will thrive.”
The Alternative Investment Management Association (AIMA) is the global representative of the alternative investment industry, with more than 1,900 corporate members in over 60 countries. AIMA’s fund manager members collectively manage more than $2 trillion in assets.
AIMA draws upon the expertise and diversity of its membership to provide leadership in industry initiatives such as advocacy, policy and regulatory engagement, educational programmes and sound practice guides. AIMA works to raise media and public awareness of the value of the industry.
AIMA set up the Alternative Credit Council (ACC) to help firms focused in the private credit and direct lending space. The ACC currently represents over 100 members that manage $350 billion of private credit assets globally.
AIMA is committed to developing skills and education standards and is a co-founder of the Chartered Alternative Investment Analyst designation (CAIA) – the first and only specialised educational standard for alternative investment specialists. AIMA is governed by its Council (Board of Directors). For further information, please visit AIMA’s website, www.aima.org.
About Aberdeen Standard Investments
Aberdeen Standard Investments is a leading global asset manager dedicated to creating long-term value for our clients, and is a brand of the investment businesses of Aberdeen Asset Management and Standard Life Investments.
With over 1,000 investment professionals we manage €638 billion* of assets worldwide. We have clients in 80 countries supported by 50 relationship offices. This ensures we are close to our clients and the markets in which they invest.
We are high-conviction; long-term investors who believe teamwork and collaboration are the key to delivering repeatable, superior investment performance. We are resolute in our commitment to active asset management.
Aberdeen Standard Investments is the asset management business of Standard Life Aberdeen plc, one of the world’s largest investment companies.
Standard Life Aberdeen plc is headquartered in Scotland. It has around 1.2 million shareholders and is listed on the London Stock Exchange. The Standard Life Aberdeen group was formed by the merger of Standard Life plc and Aberdeen Asset Management PLC on 14 August 2017.
*Standard Life AUM/AUA data as at 30 September 2017.
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