Prime Brokerage


Charting the evolution of the billion-dollar hedge fund – from a small independent asset manager to breaking into the billion-dollar club.

Prepared in partnership with the Alternative Investment Management Association (AIMA), the survey lays out a roadmap which will help small and emerging fund managers on their journey to becoming a billion-dollar manager. The report also presents helpful feedback from allocators (researched in conjunction with Edgefolio), and useful insights from those managers who have already ‘Made it Big’. This path to growth should inspire and guide smaller managers, who are on their own way to ‘Making it Big’.

Sean Capstick, Head of Prime Brokerage, GPP, says:

“The hedge fund industry has enjoyed rude health over the past year with strong performance driving allocator confidence despite a pervasive narrative of investor–driven fee pressure. Our research reveals it is still possible to launch a hedge fund and be successful in this climate, but there is a lot more that emerging managers can do to grow AuM.

“Key to ‘Making it Big’ is a flexible fee structure and strong marketing strategy. While the smallest managers are happy to offer fee reductions in exchange for significant investments, emerging managers are generally and understandably reluctant to forego fess. Increasingly we are seeing more innovative structures that place greater focus on performance fees rather than management fees, ensuring greater alignment of interests with allocators and increasing confidence in new managers. Negotiating on a greater and more bespoke range of fee options may help to land important investors at a critical stage of a fund’s growth.

“Contributing to a substantial marketing resource is often a chicken and egg scenario for smaller managers, who may find they cannot justify the in-house expertise that larger competitors wouldn’t go without. There are a number of outsourcing options for smaller managers that recognise the importance of marketing to business growth, but many should consider hiring this experience internally at an earlier stage to ensure they can reach and exceed critical mass.”

To view the 2018 hedge fund survey click here.

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