Hedge funds plan liquid alternatives launches

growthMore than half of hedge funds report assets under management are increasing, with over three-quarters of them highlighting liquid alternatives as a growth area.

Also, around half of hedge fund firms intend to launch a new hedge fund by the end of next year, according to a global survey by PwC and the Alternative Investment Management Association (AIMA).

The report, Distribution Disrupted – A Spotlight On Alternatives, assesses the impact of regulatory reforms and changed investor behaviour on hedge fund distribution models and capital-raising efforts.

The survey of fund managers worldwide found 61% reported rising assets in their hedge funds, while more than 80% of firms offering liquid alternatives funds say those products were also growing.

Almost half (44%) of hedge fund managers say they plan to launch a new vehicle by the end of next year, with around a third of US managers and half of UK managers saying they will roll out a liquid alternatives fund.

In terms of distribution models, managers say their own direct sales channel is the most productive source of growth, followed by prime brokers’ capital introduction teams, investment consultants and referrals.

The research also finds that about three-quarters of managers have changed where or how they market non-EU funds to EU investors as a result of the Alternative Investment Fund Managers Directive (AIFMD).

Only a small number of EU managers were found to be using the AIFMD passport – which allows the cross-border sales of European-domiciled funds – since they continue to manage non-EU funds, but a large proportion of those managers say they would apply for the passport if it became available.

“The alternatives industry continues to grow and evolve, a sign it is responding positively to changed investor demands as well as regulatory reforms,” says Jack Inglis, Aima chief executive officer.

“The industry is now maturing rapidly in order to manage a variety of distribution opportunities.”

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