Global Hedge Fund and Investor Survey 2012 (Ernst & Young)

November 2012

KEYWORDS: Survey, Institutional Investors, assets under management, AUM, infrastructure, hedge fund infrastructure, Hedge Fund Regulation, compensation, fees, redemption terms, Hedge Fund Managers, hedge fund investor, liquidity risk, counterparty risk, Eurozone, global financial crisis, transparency, hedge funds

Authors:

Ratan Engineer, Arthur Tully

Organizations:
  • Ernst & Young

Summary:

This year’s survey includes responses from 100 of the largest hedge fund managers in the world and 50 major institutional investors with more than US$715 billion in assets (US$190 billion of which is allocated to hedge funds).

We asked them about manager selection, headcount, infrastructure, outsourcing, regulation and reporting, compensation, fees and expenses and the future of the hedge fund industry. Here are some of our key findings:

  • New regulations and compliance requirements are taking a financial toll on hedge funds, although there is enormous skepticism about their effectiveness in both protecting investors’ interests and preventing another financial crisis.
  • Hedge fund managers and investors remain divided on compensation-related issues, although these differences do not seem to be affecting fund selection or redemptions.
  • Additional transparency is important to investors, but they do not want these costs passed along to them.
  • Investor support for emerging and start-up funds is increasing. The largest managers are not necessarily gathering all the assets, and a significant majority of funds say that they are investing in a “fund of one.”
  • The Eurozone crisis has caused investors to ask questions about exposure, liquidity risk and counterparty risk. Practices have changed in some cases, but there are no signs of a wholesale or permanent withdrawal.

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