Hedge funds-of-funds managers anticipate greater competition for investment dollars from a variety of sources, according to a new survey by accounting and advisory services provider Rothstein Kass.
Of the 103 executives from 93 hedge fund-of-funds companies, 48% said they expect more competition from single-strategy managers, 46% said they think hedge fund replication strategies will become a serious contender when it comes to siphoning off institutional investor dollars, and 19% think mutual funds will grab more hedge fund market share.
Sixty percent said their firms are providing more portfolio transparency to investors, and 58% said they would consider lowering their fees in exchange for being able to lock up assets for a longer time period.
Despite liquidity problems encountered by many hedge funds of funds in 2008 and 2009, just 34% of respondents said they are providing more liquidity to investors.
“As they seek to raise new capital … fund-of-funds managers are finding that institutional investors are placing a greater emphasis on due diligence processes. By continuing to act institutional themselves, funds of funds can provide a window into their operating environment to restore investor confidence and effectively compete with single-manager vehicles and fund of funds replication strategies that are more aggressively pursuing institutional assets,” Howard Altman, co-CEO and co-managing principal of Rothstein Kass, wrote in the firm's “Call to Action” report.