Strategic investment partners are a critical element for a successful hedge fund launch due to the higher costs of bringing new funds to market, says Patric de Gentile-Williams, chief operating office of FRM Capital Advisors (FCA), which seeds new managers.
Hedge fund seeders are a major type of strategic investor, and Gentile-Williams says that if the hedge fund industry continues to produce similar returns to recent years and the appetite for hedge funds continues, the prospects for seeding are excellent.
He says there are signs that investors are increasing allocations to hedge funds and diversifying away from the mega-size multi-strategy funds.
The quality of managers seeking seed capital is also improving, he says.
Meanwhile, Charles Prideaux, head of BlackRock’s EMEA institutional business, said appetite for alternative assets – driven by diversification and enhance risk-adjusted returns - will gain further momentum in 2011. However, the quality of risk management will be at the forefront of investors’ minds with more time and resources spent on due diligence, he said.
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