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Covid-19 could be trigger for widespread mandate losses

Hedge-fundInvestment managers with poorer performance through the Covid-19 crisis are set to see a high number of mandate losses, research suggests. 

Investors in hedge funds and smart beta were among the most dissatisfied with recent performance. 

In a survey of 368 institutional investors and family offices, 48% said they were disappointed with hedge fund returns and 64% said the same for ‘alternative risk premia’, which is usually known as smart beta. Emerging market debt also disappointed 53% of investors, the Bfinance research showed. 

As much as 54% of the asset owners are terminating or likely to terminate managers based primarily on their 2020 performance, including more than 80% of family offices. 

Apart from hedge funds, smart beta and emerging market bonds, active strategies received positive feedback, Bfinance said, and the vast majority of investors – or 82% - said they were satisfied with how their portfolios had performed.

The survey was conducted in June and the results published in a Bfinance report called ‘Managing through uncertainty’. 

Kathryn Saklatvala, head of investment content for bfinance, periods such as this year were “crucially informative” for investors to understand about portfolio diversification and resilience, and the discipline and skill of asset managers, including weak-points in risk management capabilities or processes.  

“It is great to see the majority of investors reporting satisfaction with overall portfolio performance, risk management and active management results across the majority of asset classes, although there are important changes underway on all fronts,” she added.

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