But managers are more bullish than investors
TORONTO, Dec. 5, 2013 /CNW/ - As the hedge fund industry matures, most
managers are increasingly focused on growth, according to EY's seventh
annual survey of the global hedge fund market. However, the survey
shows that while managers want to grow through new products and
distribution channels, investors aren't necessarily planning to
increase their investments.
"Managers are bullish about their growth prospects, but investors don't
seem to share that sentiment," says Joseph Micallef, Financial Services
Partner and Canadian Asset Management Industry Tax Leader at EY. "Our
survey found the majority of investors - 72% - expect to maintain their
current allocation levels."
Exploring pathways to growth also finds that as investor and regulatory demands grow, managers are
focusing relentlessly on operational efficiency and costs in the battle
to maintain margins.
"Two in three managers reported an increase in revenues over the past
year, as their performance improved and assets grew," says Micallef.
"But, only half reported improvements in margins."
In fact, one in three managers surveyed said margins declined and
another 10% noted margins remained unchanged as costs increased.
Meanwhile, 58% of managers in North America noted that costs have
Still, while managers and investors may be at odds when it comes to
growth, they agree on the growing demand for customized solutions.
"We found that nearly two-thirds of investors either already invest or
would like to invest in a customized product," says Micallef. "Managers
in the US are ahead of the curve when it comes to offering customized
solutions, with 75% either already offering, or planning to offer,
customized solutions - and we expect this solution to grow in
popularity here in Canada as well."
The survey also found customization was especially popular among funds
of funds, with nearly 70% of funds of funds already investing in a
customized solution and another 15% saying they would like to.
"All factors considered, the hedge fund industry is alive and well -
albeit, the reasons for success vary," says Micallef. "While the
largest funds are succeeding because of their size and scale and their
ability and willingness to invest in the business, the smallest funds
are succeeding by virtue of their simplicity."
About the survey
EY's 2013 global hedge fund and investor survey compares opinions from
100 hedge fund managers who collectively manage nearly US$850 billion
and 65 institutional investors with over US$190 billion allocated to
hedge funds. Topics covered in the survey include strategic priorities
for hedge funds, changes in revenues and costs, technology, headcount,
outsourcing and shadowing and the future of the hedge fund industry.
For the full survey report, please visit www.ey.com/HedgeFundSurvey.
EY is a global leader in assurance, tax, transaction and advisory
services. The insights and quality services we deliver help build trust
and confidence in the capital markets and in economies the world over.
We develop outstanding leaders who team to deliver on our promises to
all of our stakeholders. In so doing, we play a critical role in
building a better working world for our people, for our clients and for
For more information, please visit ey.com/ca. Follow us on Twitter @EYCanada.
EY refers to the global organization and may refer to one or more of the
member firms of Ernst & Young Global Limited, each of which is a
separate legal entity. Ernst & Young Global Limited, a UK company
limited by guarantee, does not provide services to clients. For more
information about our organization, please visit ey.com.
SOURCE: EY (Ernst & Young)
For further information:
416 943 5497
604 648 3607
514 874 4308