Sector Insights

The Alpha Game

Hedge Funds Step Up Operations to Capture New Growth

January 2015

The coming years look strong for the hedge fund industry. Fund managers expect ultra-high-net-worth and institutional investors to increase their allocations to the sector.

But hedge funds are also operating in a rapidly changing environment. They’re catering to the needs of increasingly demanding investors who won’t compromise on performance and expect more transparency about where and how they create value. And they’re preparing for more complex operations as regulatory demands increase.

Our research with 235 hedge fund executives looks at their outlook for the next five years. Read our report to learn what they said and what we think they'll need to do to be the leading hedge funds of 2020.  

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About the Research

This report is based on the findings of a State Street survey of 235 hedge fund executives conducted in October 2014 by Citigate Dewe Rogerson. The survey asked respondents to make a set of five-year predictions for the industry regarding business strategies, expected flows, operations and regulations. Just more than half (57 percent) of the respondents were based in North America, a third (32 percent) came from Europe and the remainder (11 percent) were from the Asia-Pacific region. Just under three-quarters of the respondents (72 percent) represented funds with assets of up to $1 billion, a fifth of respondents were at funds with between $1 billion and $10 billion, and 8 percent came from funds with more than $10 billion of assets.

Demanding investors won’t compromise on performance, and expect more transparency about where and how managers create value.