Hedge funds are becoming the linchpin for the future of the asset management industry, as investments into the alternative fund space ramps up to near 2007 levels, says industry expert, while speaking at the GAIM 2011 conference in Monaco.
There is definitely a shift in the hedge fund industry, where this sector is becoming centred in the asset management industry, said Ben Phillips, Partner, Casey, Quirk & Associates. Alternative asset management has now become mainstream and hedge funds are the centrepiece. There are new investor demands and frameworks which are provoking this shift and there are many diverse opportunities out there and it seems only hedge funds are able to address these. Investments into hedge funds into the first half on 2011 stands at $2 trillion, which is already near 2007 levels.
When talking at GAIM 2011 in his How Are New Business Practices Reshaping the Hedge Fund Industry? presentation. Phillips emphasized the issues that have led to a big change in investor behaviour and therefore demands.
We are in a world where institutional entities have imminent liabilities, said Phillips. Investors are now looking for specific outcomes rather than vis a vis returns. Investors are now paying for income volatility management, which basically is adjusting a set outcome. Even at the retail level, it no longer is about beating benchmark.
Phillips added that hedge fund investments are primarily being driven by North American investors, while European investments are still slow, while emerging markets investments still remain small.
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(LB)