The Fund of Hedge Funds Industry

September 3, 2003

Abstract

New York, NY, USA September 3, 2003

Celent predicts that the fund of hedge fund industry will sustain growth of at least 17% for the next 3 years as institutions and individuals take greater interest in hedge fund portfolio management.

has grown dramatically in recent years, now controlling US$81billion in assets. This growth has been driven by the sheer number and diversity of individual hedge funds, coupled with the complication of hedge fund portfolio management. In a new report entitled, " ," Celent analyzes the business model and growth opportunities for .

is riding the crest of two major market trends. The first is the interest of institutional investors in hedge fund investments. The total quantity of institutional assets in hedge funds is rising, as are the number of institutions making investments. The second is the general public’s tremendous interest in hedge fund investments. This interest has led traditional asset managers to offer hedge fund products, and hedge fund managers to partner with traditional financial distribution channels to access individual assets.  

In an increasing number of countries, financial regulators are relaxing their restrictions on individuals investing in hedge funds. Funds of hedge funds are receiving special attention, as these firms are seen as the alternative asset industry’s equivalent of mutual funds. In Ireland, Hong Kong and Singapore, specific regulations now exist for fund of hedge fund managers and investors. In the United States, some funds have chosen to register with the SEC, essentially making the argument that, for all intents and purposes, their activities are no different from a traditional mutual fund.

"A greater public understanding of hedge fund products will drive the growth of the fund of hedge fund industry, though capacity constraints will hold it back," comments Octavio Marenzi, managing director of Celent and co-author of the report. “Investor demand will outweigh downsides, but smart hedge funds should look to the mutual fund industry for strategies on technology and operations.”

The 24-page report contains 4 figures and 8 tables.

A is available online.

of Celent Communications' Institutional Securities & Investments and Retail Securities & Investments research services can download the report electronically by clicking on the icon to the left.  Non-members should contact info@celent.com for more information.

        

Send mail to info@celent.com with questions or comments about this Web site.

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

Media Contacts

North America
Michele Pace
mpace@celent.com
Tel: +1 212 345 1366

Europe (London)
Chris Williams
cwilliams@celent.com
Tel: +44 (0)782 448 3336

Asia (Tokyo)
Yumi Nagaoka
ynagaoka@celent.com
Tel.: +81 3 3500 3023

Table of Contents

 

New York, NY, USA September 3, 2003

Hedge Funds Industry

Return to report Abstract

 

EXECUTIVE SUMMARY 3
INTRODUCTION 4
5
  Regulatory Environment 8
  Rationale for Services 10
RISE OF THE RETAIL HEDGE FUND INVESTOR 13
TECHNOLOGY AND OPERATIONS 16
  Data Management  16
  Risk Management 17
OPPORTUNITIES & CHALLENGES 23
OBJECTIVITY & METHODOLOGY 26

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