The report, “Distribution Disrupted – A Spotlight On Alternatives”, produced by PwC and the Alternative Investment Management Association (AIMA), assesses the impact of regulatory reforms and changed investor behaviour on hedge fund distribution models and capital-raising.
The survey included fund managers around the world, and found that 61% reported rising assets in their hedge funds, while more than 80% of firms that have liquid alternatives funds said those products were also growing.
Close to half, 44%, of managers said they would launch a new hedge fund by the end of 2016. Almost one third of US managers and 50% of UK managers said they would launch a new liquid alternatives fund next year.
Managers said their own direct sales channel was the most productive source of growth in terms of distribution models, followed by prime brokers’ capital introduction teams, investment consultants and referrals.
“The [alternatives] industry continues to grow and evolve having begun the process of institutionalisation prior to the global financial crisis, is now maturing rapidly in order to manage a variety of distribution opportunities,” said AIMA’s CEO Jack Inglis.
The impact of the Alternative Investment Fund Managers Directive (AIFMD) was reported as varied. Around 75% of managers said the dirextive has prompted them to change where or how they market non-EU funds to EU investors.
The managers surveyed said their investors typically had taken 6-12 months before making an allocation. These investors cited fund performance, manager experience and investment strategy as the three most important factors in making a decision to invest.
Olwyn Alexander, PwC EMEA Alternatives Leader, said: “There is an ever increasing sophistication amongst investors in how and where they invest and hedge fund managers are clearly thinking strategically about what channels they wish to sell to, where in the world and what mechanisms they use to sell their funds.”