Preqin: Hedge Fund, PE Firms Skeptical about Impact Of JOBS Act

Apr 7 2014 | 6:22am ET

Private equity and hedge fund managers have been slow to take advantage of the marketing opportunities presented by the JOBS Act, which allows them to advertise and perform general solicitations to showcase their funds to a larger number of potential investors, according to a new survey.

Data provider Preqin’s recent survey of more than 150 alternative investment managers showed that only 4% of hedge fund managers and 5% of private equity managers surveyed said they have registered to market under the JOBS Act. Many alternative asset managers believe that the audience they target, which for many firms is comprised of large accredited institutional investors, is better reached through traditional methods of relationship building rather than through mass marketing.

But while funds have thus far been slow to register, hedge fund managers are at least considering marketing under the JOBS Act in the future; 20% of hedge fund managers surveyed said they have discussed the possibility of advertising compared to just 3% of private equity managers.

Managers cited a number of different obstacles preventing them from marketing funds under the JOBS Act. Both hedge fund and private equity fund managers cited cost as the main obstacle, with 42% of hedge fund managers naming this issue, and 24% of private equity firms.

A notable 21% of hedge fund managers stated that they do not want to be the first to market, suggesting that more managers may be tempted into advertising if this step is taken by their competitors.

Private equity fund managers see other obstacles to marketing under the JOBS Act as potential conflict with the AIFMD (cited by 22% of private equity firms surveyed), increased scrutiny from the SEC (cited by 20%), and the negative perception of marketing (cited by 20%).

“Preqin’s survey of alternative investment managers shows that the uptake of the JOBS Act will be relatively low in the short term,” said Amy Bensted, head of hedge fund products at Preqin. “The Act could provide some benefits to managers but these appear to be currently outweighed by a number of concerns, including increased scrutiny of regulators, the negative perception of marketing, and the additional costs that advertising would bring.”


In Depth

Q&A: Portfolio Advisors' Brian Murphy On The Advantages of A Private Markets Platform

Jan 2 2018 | 11:05am ET

Most private markets firms reference their platforms as a source of competitive...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Steinbrugge: The Top Hedge Fund Industry Trends for 2018

Jan 2 2018 | 12:22pm ET

Each year, Don Steinbrugge’s Agecroft Partners compiles the insights gained...

 

FINalternatives Trending

From the current issue of