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Hedge fund assets are migrating to lower cost structures, says Gemini survey

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Thirty-three per cent of investors and senior fund managers currently use some type of platform for manager allocations, according to a poll carried out during a recent Gemini webinar moderated by James Williams (pictured), Managing Editor of Hedgeweek.

The webinar, “Managed Account Platforms: The Evolution of Hedge Fund Investing,” featured industry experts discussing current trends in institutional investing and the value of managed account platforms. 

Participants also responded about the benefits they found most valuable about managed account platforms, with manager oversight being their first choice (46 per cent), followed by transparency of portfolio holdings (31 per cent), aggregated risk reporting (15 per cent), and liquidity (8 per cent).

Edward Lund, Gemini’s Senior Vice President of Business Development for Institutional Sales, says: “The data shows that the industry is just now starting to reap the full impact of managed account platforms. These platforms allow institutions to allocate to dozens of managers, providing greater diversification without the need for significant internal resources. They also provide an efficient and cost effective way for institutions to implement a fund of hedge funds model.”

Other benefits of a managed account platform revealed during the event include: access to managers at lower minimums than would be required of a direct relationship; better liquidity terms than is typical of a direct relationship; full transparency (trade-level data); guideline monitoring provided by a third-party; and convenience – electronic subscription, ease of allocation changes, single K-1, and single sub-doc.

Williams, noted: “With institutional investors searching for the most efficient way to optimise their exposure to hedge funds, many are discovering the myriad of benefits to using managed account platforms. Not only do they facilitate greater cash efficiency by accessing trading strategies on margin, as opposed to being fully funded in offshore structures, they give investors the chance to tailor their exposure and dial up risk. In a continued low rate environment, that is an advantage and one that looks set to support further evolution of the managed account platform model.” 

Registrants were also asked what type of investments they currently allocate to, with equities being the top (80 per cent), followed by commodities (57 per cent), private equity (57 per cent), and fixed income (50 per cent).

LISTEN to the webinar.
DOWNLOAD “5 Reasons to Consider a Managed Account Platform.”
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