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Institutional Investment in Hedge Funds: Evolving Investor Portfolio Construction Drives Product Convergence
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“ An example of the ‘evolution theme’ is the reshaping of the
active fixed-income business that has taken place. It started
out as investing in long-only physical assets and has become
much more derivatives heavy. This is partly an evolution of
the capital markets in combination with client demand moving
away from benchmarks. Absolute return from an asset
allocation perspective drove the traditional long-only business
into taking a more active approach to management,”
– Traditional Asset Manager
“ We see a little bit of the long-only guys trying to get into the
long/short credit space, but not as much as you’d think. There
might be a higher barrier to entry than in the equity space.
We tend to bump into the long-only guys more when we are
pushing our unconstrained global long bond funds because
this is a more similar product. We’re not seeing them as much
on the long/short side,”
– $5-$10 Billion AUM Hedge Fund
“ My group is not in the alternatives business but our products
do have ‘alternative-like’ characteristics. All the new products
that have been launched from my group in the last year and
all the funds slated for launch are not traditional long-only or
bond product,”
– Asset Manager with Hedge Fund Offerings
“ We used to call these long-only funds being run with a long/
short mindset 130/30 funds—these are now dead. Now, we call
them long only-enhanced where you’re between 90 and 110 or
you’re going to short some indexes. These strategies are still
in the long-only space,”
– European Wealth Manager