Institutional Investors Are New Sheriff in Town
Gone are the days when institutional investors will allocate to hedge funds based solely on managers' performance. With greater demands than ever before for portfolio and operational transparency, institutional investors are becoming the new 'regulators' on the Street.
Institutional investors no longer will allocate funds strictly on performance. Their demands today for portfolio and operational transparency are greater than ever, and, as a result, institutional investors are becoming the new "regulators" of hedge funds.
Historically, two primary criteria have factored into hedge fund managers' ability to attract new assets: performance and pedigree. Today, those criteria have expanded as hedge funds face new industry challenges, such as changing fee models, crowded markets and new regulations, as well as investor mandates for risk transparency and robust operational infrastructure.
For hedge funds, competing for new allocations requires the longest operating runway possible. Aside from a track record of performance, longer operating runways build client confidence in the team and the processes in place for managing operations. It is a veritable new hedge fund reality, one in which hedge fund managers are significantly rethinking their approach to, and investment in, their own operations to compete for new allocations.
In order to differentiate themselves, the hedge funds' hunt for alpha demands that fund managers view the life cycle of a trade as an integration of multiple stages needing risk assessment as well as order management and liquidity sourcing. The key to full-scale insight means harnessing tools that can intuitively display real-time portfolio and risk analytics side by side with orders that are being worked in the market. These tools enhance not only enhance alpha, but also operational credibility with the same investors.
Take a look at our latest whitepaper -- Modern Tools for Hunting Alpha -- here to learn more about how emerging managers are implementing institutional-quality infrastructure that de-risks their business, enhances decision-making, and ultimately delivers better results to their investors at a low cost.
Institutional investors no longer will allocate funds strictly on performance. Their demands today for portfolio and operational transparency are greater than ever, and, as a result, institutional investors are becoming the new "regulators" of hedge funds.
Historically, two primary criteria have factored into hedge fund managers' ability to attract new assets: performance and pedigree. Today, those criteria have expanded as hedge funds face new industry challenges, such as changing fee models, crowded markets and new regulations, as well as investor mandates for risk transparency and robust operational infrastructure.
For hedge funds, competing for new allocations requires the longest operating runway possible. Aside from a track record of performance, longer operating runways build client confidence in the team and the processes in place for managing operations. It is a veritable new hedge fund reality, one in which hedge fund managers are significantly rethinking their approach to, and investment in, their own operations to compete for new allocations.
In order to differentiate themselves, the hedge funds' hunt for alpha demands that fund managers view the life cycle of a trade as an integration of multiple stages needing risk assessment as well as order management and liquidity sourcing. The key to full-scale insight means harnessing tools that can intuitively display real-time portfolio and risk analytics side by side with orders that are being worked in the market. These tools enhance not only enhance alpha, but also operational credibility with the same investors.
Take a look at our latest whitepaper -- Modern Tools for Hunting Alpha -- here to learn more about how emerging managers are implementing institutional-quality infrastructure that de-risks their business, enhances decision-making, and ultimately delivers better results to their investors at a low cost.
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