Based on a survey of 29 fund of funds managers, pension plans, family offices and third-party marketers, StreetID’s Jesse Marrus said that he believes that as hedge fund capital inflows increase, “they will continue to hire to address investors’ concerns.”
“And,” he said, “continue to not only concentrate on performance but increase transparency and risk management.”
Marrus said that after a year of huge performance dispersion in hedge fund strategies and the second-worst year for hedge fund performance (in the 22 years that Hedge Fund Research Inc. has been tracking industry returns), “performance remains the primary focus for investors in hedge funds.”
“We feel that hedge funds mangers have done an excellent job hiring employees and consultants to increase transparency and risk management as the Securities and Exchange Commission continues to crack down on hedge funds,” said Marrus, who believes that by hiring additional back office, compliance, and legal personnel internally and externally, hedge funds have addressed a lot of the concerns for their investors.
Ultimately, Marrus agrees with Barclays and Goldman Sachs, both of which believe that hedge funds will attract more capital in 2012. Meanwhile, Reuters recently reported that the GlobeOp Capital Movement Index recently rose 142.6 points. That is the highest level that the index (which, according to Reuters, tracks monthly net subscriptions to and redemptions from hedge funds managing approximately $173 billion) has reached since October 2008.
“This is proof that capital is getting sticky,” Marrus added, noting that GlobeOp’s data also showed that overall net inflows of cash jumped to 2.25% from January to February 1.
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