Vodia Group: 130/30 Funds ‘Disruptive’ To Asset Managers, Brokers

Feb 12 2008 | 3:33pm ET

A new report says that 130/30 strategies have created more revenue streams and, in turn, more competition among brokers and custodians, as well as creating a new asset class.

Brokers and custodians are converging in offering both custody and financing to 130/30 funds and both groups stand to earn $1.26 billion in annual revenues from 130/30 strategies by 2012, according to the Vodia Group. Brokers have made substantial marketing inroads with institutional investors, 44% of which say that they would custody their planned 130/30 investments with a prime broker.

As well, 130/30 funds are “eroding boundaries” in the asset management industry by “speeding up the already blurring distinctions between traditional long-only asset managers and long/short hedge funds.” As a result, asset managers are moving towards hedge funds in pricing.

For all the hype concerning 130/30 funds, institutional and retail investors are just beginning to test the waters for hedge fund-like strategies. A recent Vodia Group survey found that 14% of institutional investors said that they had already invested in 130/30.

Vodia Group offers research and consulting to providers and users of credit, risk and securities lending products.


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