MFA Blog

Investors Turn to Hedge Funds for Larger Investment Advice Role

Posted on September 17, 2012

Institutional investors are increasingly turning to hedge fund managers for advice and insight into more than just hedge funds.  As part of a growing industry trend, many investors are looking for investment advice from hedge fund managers, sometimes even giving the managers a seat at the table with their internal investment staff.

As many institutional investors look for better risk management and strong returns, a new article in Pensions & Investments shows how hedge fund managers’ thoughts on the economy and investing are strongly sought after.  “Institutional investors desperately want knowledge transfer for the purpose of improving the asset allocation and returns of their whole portfolio,” Daniel Celeghin, partner at Casey Quirk & Associates LLC, told the publication.  “Hedge fund managers are increasingly being tapped as risk consultants, filling an information gap that their regular consultants may not be able to,” he added.

According to the article, numerous investors ask for macro views and thoughts on strategies and changing investment scenarios.  Some hedge fund managers view this as a natural outgrowth of their business and services offered and have moved to create specialized products for strategic partnerships.

“The needs of institutional investors have changed,” said Goran Hagegard, managing director of Greenwich Associates LLC.  “They need to know what’s behind the investment strategy.  Not just performance, not just the people managing the strategy, but also what the manager’s fundamental view is on how markets misprice securities and how the manager will profit from utilizing that knowledge,” said Hagegard.

Read more on this topic in Pensions & Investments here.