Report: Alternative Investments To Become Mainstream

Dec 12 2007 | 12:26pm ET

A new report by Putnam Lovell says that public and private asset management firms, both traditional and alternative, will capture 33% of all assets under management by 2012, up from 24% today.

However, traditional active management, long-only stock and bond portfolios charging asset-based fees will contribute less than half of total industry revenue by 2012, down from about 69% in 2006, according to the report, entitled After the Belle Époque, the Future of Fund Management. 

Rather, more than 50% of revenue will come from performance fees, with alternative investments rapidly becoming mainstream and long-short extension strategies proliferating. Firms primarily reliant on long-only mutual funds will be under the most severe pressure to reinvent themselves or lose business.

In addition, hedge funds, now in more challenging markets, will be more easily distinguishable and institutional-grade firms generating strong performance in all market conditions will gain further market share at the expense of lesser competitors. The report predicts that roughly 20% of the current total, approximately 2,000 funds, will disappear in the next five years.

“The days of relying on tax advantages and government subsidies to spur retirement savings and growth in the fund industry are over,” said Ben Phillips, managing director and head of strategic analysis at Jefferies Putnam Lovell, and author of the new report.

“Individual investors, Asia, and sovereign wealth funds will be major sources of new business in the next five years. Yield rather than asset accumulation will increasingly be the focus of investors, boosting demand for a new generation of products.’’


In Depth

High Time For A Cannabis Hedge Fund?

Sep 30 2014 | 7:07am ET

Launching a hedge fund is always a gamble, but Leslie Bocskor's decision to launch...

Lifestyle

Griffin Donates $1M To Rauner's Illinois Gov. Campaign

Sep 22 2014 | 9:29am ET

Hedge fund billionaire Kenneth Griffin definitely has a dog in this fight. The Citadel...

Guest Contributor

Appraisal Ratio Key To Evaluating Hedge Funds And Other New Investments

Sep 29 2014 | 3:07pm ET

As a former finance professor Peter Hecht experiences heartburn every time he hears...

 

Videos

Editor's Note

    Must Attend Hedge Fund Charity Events For October

    Sep 30 2014 | 9:29am ET

    The crisp Autumnal days of October are upon us, and so are a few of the hedge fund industry’s favorite charitable events. If you have never been to Rocktoberfest, well, you are missing out. And for a quieter evening of sipping and socializing, stop by HFC’s Wine Soiree. Read more…

 

Futures Magazine

September 2014 Cover

High frequency market making

High frequency trading is not evil, it is not a conspiracy and it really is not new; it is the natural evolution of the professional trading community making markets, providing liquidity and hopefully...

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.