Hedge funds expect to raise most of their capital from pension schemes rather than rich individuals over the next five years and customised investment solutions are becoming more prevalent.
Research of 100 hedge funds with over $440 billion (€413 billion) of assets under management also found that many funds expect to use special fees to gain clients.
The report, called Growing up – A New Environment for Hedge Funds and produced by the Alternative Investment Management Association (Aima) and two other organisations – found 46% of managers say they would either alter their fund strategy or launch new products over the next five years to attract capital from pension funds.
Almost 70% of managers say they offer, or plan to offer, custom investment solutions and more than two-thirds anticipate using specialised fee structures to attract investment.
Institutional investors like pension plans, university endowments, and charitable organisations now make up nearly 65% of the industry’s assets.
“The days of hedge funds simply being an investment tool for high-net worth individuals are over,” said Richard H Baker, president and chief executive of the Managed Funds Association, which co-produced the report with KPMG International and Aima.
Regulation, particularly in Europe and Asia Pacific, is cited by more than three-quarters of the managers surveyed as the biggest threat to hedge fund industry growth.
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