INVESTMENT MANAGERS

SEI Knowledge Partnership

Jan
18
2010

The Era of the Investor

By SEI Knowledge Partnership

Welcome to the Era of the Investor.

White Paper: "The Era of the Investor - New Rules of Institutional Hedge Fund Investing" (PDF, 19 pages, 943KB)

For the hedge fund industry, the results of our 2009 survey come as both good news and a call to action. Institutions, which have replaced high-net-worth individuals as the core business for hedge funds, are firmly committed to preserving the role hedge funds play in their portfolios. Indeed, a portion of the survey respondents plan to increase their hedge fund allocations, albeit incrementally.

Yet it is also clear that investors’ continued commitment comes with substantially increased expectations. Indeed, power has shifted. Institutional investors and their representatives are increasingly asserting themselves, changing the rules of hedge fund investing as they push managers toward greater transparency, insist on identifying demonstrable sources of alpha and intensify their focus on operational effectiveness.

  • Investors remain committed. Nearly 80% of all survey respondents said they have no plans to change their hedge fund allocations in the next 12 months while 15% expect to increase their allocations.
  • Transparency is more critical than ever. More than 70% of respondents reported requesting more detailed information from managers than they did just a year ago.
  • Worries over performance have been eclipsed by other concerns. Performance ranks fifth on the list of inventor worries, topped by lack of transparency, liquidity risk and other factors.

SEI's Knowledge Partnership, in conjunction with Greenwich Associates, surveyed senior investment professionals at 96 institutions representing foundation or endowment funds, corporate funds, public or government funds, and Taft Hartley funds. “The Era of the Investor: New Rules of Institutional Hedge Fund Investing,” uncovers ways to help hedge fund managers retain and capture institutional assets, including:

  • How the market has impacted investors’ expectations.
  • What investors are most concerned about and how to address those concerns.
  • New rules of engagement for managers seeking institutional assets.