Hedge Funds Managed Accounts Predicted to Rise 70% by 2011
A research firm predicts that assets in hedge funds' managed accounts will rise almost 70% by 2011. After 2008, investors have expressed increasing concerns over management and performance fees, changing redemption policies, supporting managed accounts, and launching more liquid strategies. Many hedge fund managers are trying to address these concerns in order to bring back investors who withdrew their investments in the last year.
The TABB Group estimates that separately managed accounts will be more popular in the next two years. The group forecasts that assets in the hedge fund industry invested using managed accounts will reach $790 billion by 2011, a big jump from $468 billion in 2009.
Compared to a few years ago, investors have increased their bargaining power over hedge fund managers. There is a limited amount of capital, and investors possess the assets required by hedge funds to survive.
A common way hedge funds are alleviating investor concerns is through separately managed accounts. The number of investor requests has already started to trickle in because of the perceived advantages managed accounts offer, especially regarding transparency and control. But not all hedge fund managers are convinced and will resist managed accounts because they believe the costs outweigh the benefits— due to additional operational and administrative challenges—and threaten the value proposition of the hedge fund infrastructure.
Hedge fund managers are also responding by changing redemption policies. They are shortening lock-up periods and launching new funds with more favorable terms. They are also minimizing the use of gates, yet remain conscious of the fact that meeting the demands of individual investors must not be sacrificed for the well-being of the entire pool of investors. Report available for purchase here.
Related to: Hedge Funds Managed Accounts
Tags: hedge funds managed accounts, managed accounts, separately managed investment accounts, hedge fund managers, investors, 2009, estimates
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