Economic uncertainty coming hot on the heels of the Covid pandemic is fueling demand for more innovative and flexible fund financing, according to a Funds Europe report.
Net Asset Value (NAV) finance has already been one of the market’s growth areas, but contributors to the report suggest demand for yet more innovation, which would increase still further during market volatility and possible recession.
The ‘Trends in Fund Financing’ report, compiled in association with RBS International, interviewed experts across the fund finance market from various jurisdictions. Many cite Covid as a pivotal moment with managers looking to hold assets longer and looking for new financing solutions.
Bronwen Jones, fund finance partners at Reed Smith, told Funds Europe: “We saw some of that innovation at the beginning of Covid when everyone thought the world was going to stop completely in its tracks… everyone was asking where the money was going to come from. We’re going to see more of that with a possible recession phase coming up,” she said.
Longer investment horizons, inflation and FX hedging are all factors cited by experts as likely to increase demand for new solutions in the near future. This is expected to lead funds to seek closer and more lasting relationships with finance providers.
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