The post-pandemic outlook is challenging for emerging fund managers. The conditions that supported the low interest rate and low inflation environment since the Global Financial Crisis have already started to be eroded by central banks and policymakers. Although this may offer alternatives managers an opportunity, they also face high expectations from investors for them to deliver returns.
Meanwhile, the operating backdrop for many managers has become much tougher. New regulations are impacting a range of business areas and investors are increasingly demanding greater disclosure.
All this contributes to a challenging environment for the next cohort of emerging managers. In addition to the traditional issues that emerging managers typically face – such as marketing, building brand awareness and fundraising – managers launching new funds also must build more complex back-office operations and deal with more demanding investors.
Managers also face difficulties in finding the solutions and services they need to address operational challenges. Whether it is ESG expertise, software and systems, or an alternatives-focused fund accountant, managers are signalling that some domiciles may not have the experience or ability to provide the services they need.
Survey respondents highlight a range of factors that are important to them when deciding where to domicile. While costs and the regulatory environment are rightly crucial factors in making that decision, the fact that ‘service quality’ emerged as the top issue for emerging managers reflects how important it is to have access to a strong financial ecosystem that understands their business.
Therefore, emerging managers need to choose the fund domicile that best helps them to meet critical requirements – from a regulatory, legal, and operational perspective – and give them the best chance of a successful launch.
“The needs and challenges of emerging managers are nuanced and diverse. They span the operational, such as structuring, regulatory compliance and accounting, to broader issues such as cost and digital adoption,” says Jersey Finance’s Refson.
“Ultimately, for domiciles, the focus needs to be on removing as many of the challenges as possible to enable managers to get on with their core objective – generating returns in the early stages of their venture. For domiciles that understand that, and can provide a certain, stable, ‘no surprises’ platform, then there is huge potential to support some of the most exciting managers.”
Read the full report below:
1. Introduction: Shedding light on the emerging manager experience
2. Emerging managers survey 2022
3. The biggest challenges
4. Finding the right solutions
5. Choosing the right domicile
6. Conclusion
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