Alternative funds in Asia Pacific need to address new challenges
Alternative funds managers in Asia Pacific need to focus on the challenges of growth in a COVID-normal environment which will include environment, social and governance (ESG) products and diversity and inclusion (D&I), these were the results of the 2020 EY Global Alternative Fund Survey.
The study found that despite market volatility, ongoing geopolitical tensions, increased trading volumes and disruption to society due to COVID-19, alternative fund managers in Asia-Pacific persevered but all surveyed funds reported impacts on their client relationships as a result of the COVID-19 pandemic.
Additionally, three-quarters of private equity respondents and 38% of hedge fund respondents noted the pandemic had had a major impact on client relationships and almost 90% of investors globally were asking their fund managers for ESG products.
“Alternative fund managers in Asia-Pacific have displayed remarkable resilience in the face of the global pandemic, quickly adapting their operations to the remote working environment. While many fund managers in the region saw less than ideal performance in the first half of 2020, many are experiencing a stronger than expected second half,” EY Asia-Pacific Wealth and Asset Management Leader, Elliott Shadforth, said.
“As we look ahead to 2021, fund managers must focus on tackling the challenges of growth in this COVID-normal environment.”
According to the study, allocators were increasingly focused on ESG products and socially responsible investing, but also wished to partner with managers who prioritised their ESG policies and, globally, 88% of investors reported they were regularly speaking with their fund managers on how ESG is incorporated into their investment-making decisions.
Also, less than half (46%) of respondents in the region said they had a dedicated individual responsible for managing ESG at their organisation, well below the global industry where 80% of managers now say they have dedicated individuals responsible for ESG.
At the same time, talent management and diversity and inclusiveness remained a focus for alternative fund managers, with a quarter of Asia-Pacific’s hedge fund managers (27%) and private equity managers (25%) having only an informal D&I policy in place and the majority had no formal D&I policy whatsoever (67% and 58% respectively).
“There are a number of reasons that diversity at alternative fund managers is critical, but investor behavior and expectations are near the top of the list. Now is the time for alternative fund managers to step up and critically examine how they are thinking about talent attraction, development and retention to ensure a more diverse workforce,” Shadforth noted.
“The experiences and knowledge from these individuals will prove to be fruitful in generating new ideas that ultimately benefit the manager and its investors.”
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