Thursday, 2 October 2014
Last updated 21 min ago
Jan 24 2008 | 8:43am ET
In recent years, institutional investors have had a nearly insatiable appetite for alternative investments, a trend widely expected to continue for years, possibly even decades, to come. But a new report from the TABB Group throws cold water on that thesis, warning hedge funds and other active asset managers of the threat posed by index-based investing.
Report author Adam Sussman, research director at TABB, calls the appetite for index-based investments “nearly insatiable,” noting that active managers are already losing out on some $12 billion in management fees due to the $1 trillion U.S. investors have put into index-based products. That pain has so far been felt mostly by traditional asset managers, such as mutual funds, but Sussman cautions that hedge funds, which manage some $2 trillion globally, are not immune.
“There’s no slowing down the tide of indexing,” he said. “Pension plans need better ways to measure the performance of alternative asset managers. ETF, exchange-traded note and other index-based managers will need more products in the pipeline.”
Specifically, hedge fund replication strategies could put a serious crimp in hedge fund managers’ styles, costing them further billions in fees. Sussman says that by next year, some 70% of all pension plans will be utilizing customized benchmarks. And there are plenty available: He estimates that there are 48,256 possible indices versus 40,365 publicly-traded companies.
Sep 22 2014 | 4:15pm ET
"I tell people that everybody likes good news and so if you have good performance that’s wonderful,” explains Mike McKitish of Peddie School's endowment, “but it’s the people that want to talk about the bad news or where they drifted and how they came back and how they stayed to their discipline…” that he wants to hear from. Read more…
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…
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...