Tuesday, 9 August 2016

Hedge fund industry developments and implications for growth

Yes, it's the Tuesday morning PR email, back by popular demand. This one is from Barclays. 'Er ... Tuesday morning, boss?' There isn't any news around, Voice. It's the summer holidays, ain't it? I have to rely on these emails now. Thank God for the PR industry, that's all I can say! 'Amen.' Exactly!

Uh, well ... there is a problem though. 'What's that?' I can't open the attachment. 'Ha! It's quite easy. Just click on that pdf symbol there.' No, Voice. I can't open it. I'm not allowed to. 'Why on earth not?!' Because it says here: Confidential - For Institutional Investors Only. 'Ha! Ignore that.' I don't want to get into trouble. 'You won't get into trouble. Just open it.' I'm not an institutional investor, am I?!

No, dear reader(s), I'll just quote from the email -

Prime Services Strategic Consulting has just completed its latest in-depth content piece: "Against All Odds - Hedge Fund Industry Developments and Implications for Growth". In this study, the Strategic Consulting team sought to provide a mid-year analysis on the major developments in the Hedge Fund Industry with a view to assessing the evolving value proposition of Hedge Funds, key investor themes, and the asset raising landscape for remainder of 2016. The report is based on input from 340 HF Investors representing ~$8tn+ in total assets as well as analysis of data from Hedge Fund databases.

'That sounds great, boss! Now open up the study, report, or whatever it is.' NO! 'Man, they wouldn't have sent it to you if you weren't allowed to read it.' Are you stupid?! I'm not an institutional investor!!! Try to understand, for Christ's sake!

Here's the main part of the email, reader(s) -


Hedge Fund Performance

How have Hedge Funds performed in recent years on a beta-adjusted basis?

What drivers do investors attribute the industry's relative underperformance to? Is there evidence to support their hypotheses?

Is the Hedge Fund industry too big?

How have macro factors impacted the industry's ability to generate alpha?

Investor Sentiment

Has recent Hedge Fund performance disappointed investors' expectations? What steps, if any, are investors planning to take as a result?

Have Hedge Funds been additive to investors' portfolios in recent years?

How are investors responding to performance challenges in their interactions with Hedge Funds?

How do investors now perceive different types of Hedge Fund managers?

Looking Ahead

How do we expect recent events to impact Hedge Fund launches and liquidations in 2016?

What are our expectations for the industry size going forward? How much do we expect the change to come from performance vs. flows?

What Hedge Fund strategies are investors most keen on increasing / decreasing allocations to?


'Oh, I'm gutted. This report is probably really brilliant and exciting. I mean, it must be fascinating to read. And you won't even look at it! How do you think your readers feel?' Screw the readers, son!

Jesus H. Christ! Ah, that's enough! / There wasn't even any mystical stuff, anyway. Why should the world's foremost financial shaman be interested?

Anything else? The Straight Line? Oh, I had to start it again yesterday because last week I went off to Pluto, you dig? It's no big deal. There's twenty-five years of it. My vision, my design. 24/7! 'Really?' I'm serious, man. Fortunately, I have those two dotted lines. One above, and one below. I'll be all right.