Investors and hedge funds seeking partnerships, says Barclays/AIMA survey

June 27, 2014  

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Hedge fund investing is no longer about buying a product. According to the latest survey by the Alternative Investment Management Association and Barclays, investors are increasingly striking partnerships with hedge funds, underlining the closer collaboration taking place between the hedge fund industry and its investor base.

The survey, called 'The Extra Mile: Partnerships between hedge funds and investors’, covered investors and managers managing $2 trillion and $200 billion of assets respectively.
It highlights that partnerships of varying forms between hedge funds and their investors are becoming increasingly common. More than three-quarters of managers and two-thirds of investors who took part in the survey said they had entered into partnerships.

The survey found five key elements of partnerships: access to expertise and resources; customised products and solutions; co-investment; product seeding; and equity stakes.

The survey revealed a number of benefits to investors, including improved knowledge and understanding, better alignment of interest with managers, and better value for money.

Both larger and smaller managers and hedge funds of all strategies were found to be striking partnerships. Benefits to managers included "stickier" or more loyal investors, support for new product development, cross-selling opportunities and the offer of investor references.

"The publication of this paper comes at an important time in the evolution of the hedge fund industry. Amidst the on-going process of institutionalisation, investors are actively pursuing a more direct engagement with the underlying hedge funds in which they are invested," said Michelle McGregor-Smith, the chief executive of British Airways Pension Investment Management and chair of the AIMA Investor Steering Committee.

"What the survey shows is that managers are truly going 'the extra mile’ in terms of sharing knowledge and resources and providing customised products and services to their investor partners. These partnerships are also providing further evidence of very high levels of satisfaction among investors in their hedge fund investments," Jack Inglis, AIMA’s chief executive officer. 

To download 'The Extra Mile: Partnerships between Hedge Funds and Investors’, please click here.

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