Hedge funds

Asset price falls, substantial redemptions and increased regulation are all significant challenges for hedge funds. Yet for those with well-managed funds based on transparent strategies, there are opportunities.

Governance & risk management

Hedge fund governance and operational risk management has been called into question by market events. Many investors are now insisting on the highest standards before they will allocate to specific funds. Are you aware of what constitutes best practice? Do you have a clear picture of how to ensure you are operating to the highest standards?

Growth

Hedge funds that can generate sustainable alpha through less complex strategies are evidently still in demand. A strong institutional market place remains for certain types of hedge funds. Which markets should you be targeting for growth?

Human capital

With profitability under pressure, thought needs to be given to how performance can be appropriately measured and retaining the best people may entail creating a new set of benchmarks.

Market reporting

Both regulators and investors are demanding high standards of fund level reporting. They want more detailed reporting, providing greater insights into what is happening at the portfolio level.

Merger and acquisition

In an environment where asset prices remain depressed and margins are lower, the rationale for ownership of hedge fund firms will be brought into question. Scale will become more important and larger asset managers will have the opportunity to buy smaller rivals at depressed prices. Private equity and hedge funds may acquire traditional asset managers to diversify into mutual funds.

Regulation and compliance

Hedge funds are facing increased regulation. It is clear that some strategies could be hampered by regulatory requirements. However, some of those that have the requisite infrastructure could make a virtue of their ability to comply. Proactively tackling changing regulation could be a competitive advantage.