Hedge fund managers are looking to build stronger partnerships with their advisers. As volatility and uncertainty continue to hammer markets, managers want efficient, timely responses to help minimise risk and address any concerns before making decisions.
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Hedge fund managers are looking to build stronger partnerships with their advisers. As volatility and uncertainty continue to hammer markets, managers want efficient, timely responses to help minimise risk and address any concerns before making decisions.
“With volatility back in the play over the past year and continuing going forward we see indicators that the appetite for hedge funds increasing among institutional investors. This is not an unusual phenomena – when traditional markets suffer, alternatives tend to get more attention and allocation to the class” comments Joseph Cassano (pictured), partner and leader of Withum’s Financial Services Group Hedge Fund Group.
He outlines how in the past it may have been easier to select an investment as most of the market was continually going up. However, currently, hedge funds allow for the preservation of capital and depending on the strategy, appreciation of capital through real alpha generation. “The beauty of hedge fund strategies is that good managers can generate positive returns and minimise loss even in volatile, soft or down markets. It’s the whole purpose of hedge funds” he adds.
Having strong business partnerships can support these managers in delivering the best possible results to their investors. This is particularly relevant during challenging times.
Cassano notes: “In the current environment, clients want real relationship driven communication and interaction and not just an obligatory contractual relationship. They want to be able to pick up the phone and ask a question and get real-time responses and not have to wait a few days for a response or be charged each time they pick up the phone. They want to tap into expertise to help minimise risk and address the what-ifs before making decisions, like a true business partner would. This is where clients find value.”
He further explains how managers are expressing a greater desire for communication and collaborative working styles through changing economic situations, including mark fluctuation and valuations of investments. In addition, having a professional attitude in a challenging environment is critical to building these business partnerships. “Understanding our client and potential economic situations and managing professional services in a hybrid work environment is key,” Cassano says, “it is important to safeguard professional and personal information in a hybrid work environment. It’s obviously a priority for us as a firm, but we also help our clients adopt and monitor their own cybersecurity infrastructure. This is another area of focus for the SEC and even private advisors need to be paying attention and implementing safekeeping strategies.”
From its perspective, Withum has been keeping up with industry trends – prime examples being DEI and ESG, which the firm has prioritized for years. Cassano outlines: “It’s important for us to be good corporate citizens, cognizant of environmental and social responsibility, and to enable our clients to be the same, either through their corporate entities or their investment vehicle strategies. Regulators have, in fact, already begun establishing minimum requirements for ESG compliance and oversight, and the SEC is examining compliance with these regulations.”
Withum has a specific group dedicated to the space and encourages companies to implement and monitor their ESG risk management and develop more sustainable business practices. “We provide clients with the tools to develop, execute and monitor their own ESG programs for themselves and their portfolio companies,” Cassano concludes.
