The 2019 EY Global Alternative Fund Survey provides some interesting reading on the state of the business for alternative funds. The survey has little to do with the current state of investing, but with how funds are managing their businesses.
The key investment issue is that investors are tilting exposures away from hedge fund and toward higher returning private equity funds. The investor's search for yield and return continues and hedge funds have to not only compete against traditional asset managers and their peers but other alternative managers.
The key investment issue is that investors are tilting exposures away from hedge fund and toward higher returning private equity funds. The investor's search for yield and return continues and hedge funds have to not only compete against traditional asset managers and their peers but other alternative managers.
The core survey business questions focus on strategic priorities, talent management, investments in data and technology, and the future landscape. The questions and answers suggest a more mature industry that is grappling with asset acquisition, talent management and cost containment. Investors also believe their focus should be on cost containment, talent management and succession planning. Innovation and improved return generation were not listed as strategic priorities.
Talent management priorities included retention, technology skills, and inclusiveness of culture. Data priorities included compliance, order/management enterprise systems, and fund accounting as critical issues. The future landscape question found passive investments as the big disruptor to alternative businesses.
These business issues are not unique to alternative firms but seem to be core issues for any asset management or finance company. In fact, the survey seemed to be review of the key issues for any large corporation. Alternative fund firms have grown-up and face grown-up management problems.
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