Asset growth remains top priority for alternative funds
Asset growth is expected to remain a top priority for alternative fund managers, but increasing investor appetite for private equity might create divergence between how hedge fund and private equity managers tackle growth, according to EY’s survey.
The 2019 EY Global Alternative Fund Survey to, which surveyed hedge funds and private equity firms, assets under management allocated to hedge funds went down by 7% globally, while allocations to private equity increased globally by 7%.
On top of that, a number of international companies planned to enter the Australian market to leverage demand and growth in the superannuation sector.
Also, alternative fund managers continue to diversify products via co-investment vehicles, environmental, social, and governance (ESG) products, separately managed accounts (SMAs), and more.
At the same time, in Asia alternative fund managers reported the most assets under management (AUM) growth in the past two years has come from family offices and high net worth investors, while managers in Americas and Europe see the greatest AUM growth from pensions over the same period.
The report also found that diversifying into products that are environmentally and socially responsible would be crucial as 29% of investors globally were already investing or planning to invest in socially responsible funds, and nearly two-thirds of global investors say that managers’ ESG policies have a critically important impact on their decision to invest.
In Australia, on the other hand, investors were continuing increased allocation shift from hedge funds and into private equities as well as there was a growing interest in private credit and real estate offerings as investors looked to diversify further their portfolios.
“We expect to see a number of international companies entering the Australian market in the next six months to leverage demand and growth in the superannuation sector, primarily in the form of listed investment products,” Antoinette Elias, EY Oceania Wealth and Asset Management Sector Leader, said.
“In the coming years, alternative fund managers in Asia-Pacific should expect to see greater AUM growth from family offices, high net worth investors, and private wealth management platforms.
“Surprisingly, fund managers in Asia-Pacific are less likely to prioritise digital transformation in the front office. Asia-based fund managers are behind the curve in technology investment, and those organisations that have made the enhancements to their technology offerings will have a considerable advantage over their peers.”
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