One Size Does Not Fit All
Many investors that BHA analysts speak with have set requirements for the amount of assets a potential fund should have under management. As reported in the article above, “Investors Demanding Stability, Sophistication, and Transparency from Fund Managers,” during the month of August, 57 percent of active hedge fund investors indicated a preference for funds with $100 million to $1 billion in assets under management. While these investors represent a cross section of alternative fund investors, analysts have also found that many investors tailor their requirements based on specific searches or mandates they are pursuing at a given time.
Sometimes investors look for smaller funds that are nimble when they want managers that can move in and out of positions relatively easily. Other times, investors turn to larger funds when they want to make a sizeable allocation to a particular strategy but do not want hold a large position in the fund.
An example of an investor taking this case-by-case approach is a wealth advisor based in Switzerland. The firm had previously searched for smaller global macro
managers with assets of less than $100 million. Recently, however, the firm searched for multi-strategy funds with assets in the $300 million to $500 million range.
As BHA analysts speak with investors, it’s apparent that some have no preset requirements for assets under management and are changing their specifications with every mandate. This gives managers of all sizes an opportunity to get in front of investors.