Investors are striking partnerships with hedge funds, underlining the closer collaboration taking place between the hedge fund industry and its investor base.
In fact, more than three-quarters of managers and two-thirds of investors have entered into partnerships, finds a survey by the Alternative Investment Management Association (AIMA), and Barclays.
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The survey notes five key elements of partnerships: access to expertise and resources; customized products and solutions; co-investment; product seeding; and equity stakes. It adds there are a number of benefits to investors, including improved knowledge and understanding, better alignment of interest with managers, and better value for money.
Benefits to managers include “stickier” or more loyal investors, support for new product development, cross-selling opportunities and the offer of investor references.
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Investors surveyed manage a combined $2 trillion in assets, of which approximately $260 billion is allocated to hedge funds. They include pension funds, endowments, foundations, sovereign wealth funds and family offices globally. The managers surveyed manage approximately $200 billion in assets.
“What the survey shows is that managers are truly going the extra mile in terms of sharing knowledge and resources and providing customised products and services to their investor partners,” says Jack Inglis, AIMA’s CEO. “These partnerships are also providing further evidence of very high levels of satisfaction among investors in their hedge fund investments.”
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Lou Molinari, managing director, Global Head of Capital Solutions, Barclays, adds, “Managers who are interested in pursuing partnerships should put in place a strategy to do so, identifying those investors they want to partner with, and deciding which of the elements of partnership they are best-placed to deliver.”