What is the future of hedge funds?

GarrettKimmel

GarrettKimmel

IMO the industry is maturing rapidly and will look more like present day mutual funds. The 'front office' positions will be smaller and more mandate driven while functions to support business development (marketing, sales, risk) will grow but unfortunately without much of the upside potential once possible.

What is your point?
 
I think much of the industry is moving (Slowly) toward SMA. More clarity and control for the beneficial owner. Even many large pension funds, Fund of funds and family offices are demanding SMA.

Bob
 
A hedge fund means that management is highly incentivized to create out-sized returns for the investors. There are not so many managers that warrant being paid anything at all, frankly, and there are very few that deserve being showered with gold. I only care about the later, the rest can spontaneously combust for all I care.
 
slowly the different types of investment vehicles will equalize with regards to what they are able to get away with on the fees. We are already seeing retail vehicles such as mutual funds and RIAs offering long/short multi asset strategies where the fees range from 1.5% to 2.5% flat without incentive fees. These retail vehicles are slowly becoming more sophisticated every year as the HF investment methods become more widespread. Sooner or later the current value proposition of hedge funds will just evaporate.
 
Hedge funds will always exists, even though i don't like them -- but maybe their fee's will go down a bit/more competitive. and/or more investors/traders will trade themselves o_O

I'm sure Silicon Valley website startups are making it easier for investors/traders to trade themselves. and brokers are creating solutions themselves for their clients.
 
I'm not happy about paying a yearly management fee, but in the end, I only care about risk adjusted returns after taxes. I pay 2/20 and 0/25 and prefer 0/25. I hope each month I have to pay them a lot of incentive fees! These are SMA not hedge funds.

Hedge funds have to charge a yearly management fee to pay for the admin, audits and base expenses. If they have scale, it does not have to be 2%. If they are small, 2% might not cover it.
 
rmorse said:
I think much of the industry is moving (Slowly) toward SMA. More clarity and control for the beneficial owner. Even many large pension funds, Fund of funds and family offices are demanding SMA.
More...

Especially for managers with more liquid strategies that don't require much "plumbing" to replicate the reference fund in a SMA format.
 
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