Deutsche Asset & Wealth Management’s (DeAWM) Aggregator Solutions fund has recently acquired a $85m portfolio of illiquid hedge funds from a Swiss asset manager.
Aoifinn Devitt, head of the World Series Fund platform at Nikko Asset Management, sees consolidation as one key outcome for funds of funds and funds of hedge funds in future.
For the past two to three years, hedge fund and other investors have been eagerly anticipating opportunities expected to emerge from the swift and substantial deleveraging of European banks.
Low net positions and the popularity of relative-value strategies suggest that hedge managers are reining in their risk.
Alix Capital’s latest quarterly survey has revealed assets under management on Ucits hedge fund platforms have increased by 14.3% since the start of the year.
In broad terms, M&A involving funds of hedge funds is being done from two different rationales. It could be argued that one, taken recently by Franklin Templeton and K2 Advisors, will be far more acceptable to clients.
Fund selection is becoming increasingly difficult for funds of hedge funds as the dispersion of returns between the best and worst managers for many strategies is lower now than at any other point since the onset of the credit crunch.
Swiss funds of hedge funds have been at the epicentre of various crises and industry scandals since 2008, but the largest players there still control one third of the money in the world’s largest alternative multi-manager funds.
Despite a relatively small proportion of Swiss single strategy hedge funds in the global pool, Swiss hedge fund managers are convinced that in the next three years the number of single strategies will grow faster than funds of funds.
As Europe’s banks came under intense capital, regulatory and political pressure after the 2008 crisis, many practitioners expected them to unleash a wave of M&A, principally involving their fund management unit.
John Godden has joined Sciens Fund of Funds Management Holdings to head up its managed account platform.
The decision by Thames River to close its £54m Multi Hedge listed fund and return the cash to shareholders next month is part of a long-term demise in faith by investors in the listed alternative fund sector, analysts say.