In the latest Preqin study, hedge fund managers revealed that they are altering their fees, risk adjustment procedures and strategic offerings to attract institutional investors to their hedge funds. Institutional capital is at an all time high representing about 61% of all assets in hedge funds today. The outlook is even more positive with 85% of the 60 hedge fund managers interviewed feeling that it will increase even more over the next 18 months.
This increased amount if institutional capital at work in the asset class is effecting change within the industry; for instance 46% of managers have put more risk management procedures in place as a result of having more institutional investors in their funds. Fee pressure from investors has been felt by fund managers and 42% of funds have reduced fees in order to attract the institutional market.
Fund managers are also launching alternatives to traditional commingled structures to attract institutional investors. 21% of respondents had already introduced UCITS structures or managed accounts to appeal specifically to institutional investors and a further 15% of fund managers intend to launch a UCIT structured hedge fund in the next 12 months to take advantage of the heightened liquidity and transparency requirements of the institutional market.
For more information on Preqin’s database of 2,500 institutional investors please visit http://www.preqin.com/wizTrial.aspx to arrange a demo with our client services team.