- Advertisement -
- Advertisement -

Troubled by Hedge Fund Fees, Performance and Transparency

- Advertisement -

Stockholm (HedgeNordic) – The new Q2 2016 NEPC Endowment and Foundation Poll has revealed that some hedge funds and endowments are re-evaluating their allocations to hedge funds following concerns about high fees, underperformance and transparency.

The survey, which is a measure of endowment and foundation confidence and sentiment related to the economy, investing and market performance, also includes a special focus on how endowments and foundations view hedge funds, and has shown troubling findings in its most recent iteration.

“While hedge funds play an important role in many institutional portfolios, the last several years have been difficult for the industry and investors are starting to look very closely at how hedge funds can work for them. These survey results are by no means indicating a mass exodus from hedge funds, but they do point to greater pressure being felt in the industry as a whole,” Cathy Konicki, partner and head of NEPC’s endowment and foundation practice group, was quoted by HedgeWeek.com as saying.

The survey showed 24% of respondents cited having zero exposure to hedge funds, a significant increase from the Q2 2014 NEPC Endowment and Foundation Poll which showed only 2% of respondents with no exposure to hedge funds. This finding paralleled a drop of 23% of respondents allocating 11-20% of their portfolio towards hedge funds in Q2 2016, by comparison to 39% of allocations in the same bracket for Q2 2014.

Endowments and foundations cited hedge fund fees as a serious concern, with 25% of respondents having asked for or having been offered reduced fees by hedge fund managers within the past 6 months. High fees were cited as the second largest challenge faced by hedge fund investments at the time of publication (54%), surpassed only by disappointing returns (80%) and trailed by transparency (37%).

On the positive side, 55% of endowments and foundations responded they are not actively discussing reducing their allocation to hedge funds, despite 28% reporting such considerations. Nearly a fifth of respondents (17%) have either increased or are considering increasing their allocations.

“This survey tells us that endowments and foundations are frustrated with hedge funds but they’re not giving up on them, and with several global concerns on the horizon, many investors may be looking towards hedge funds to protect their portfolios,” said Ms. Konicki.

Indeed, the survey also revealed bullish sentiments for a number of strategies, with 36% of respondents projecting multi-strategy hedge funds to generate the highest returns over the next 3-5 years, 33% expecting the same from long/short equity, and 25% and 22% for global macro and credit respectively.


Picture: (c) Drazen – shutterstock


Subscribe to HedgeBrev, HedgeNordic’s weekly newsletter, and never miss the latest news!

Our newsletter is sent once a week, every Friday.

Glenn Leaper, PhD
Glenn Leaper, PhD
Glenn W. Leaper, Associate Editor and Political Risk Analyst with Nordic Business Media AB, completed his Ph.D. in Politics and Critical Theory from Royal Holloway, University of London in 2015. He is involved with a number of initiatives, including political research, communications consulting (speechwriting), journalism and writing his post-doctoral book. Glenn has an international background spanning the UK, France, Austria, Spain, Belgium and his native Denmark. He holds an MA in English and a BA in International Relations.


Most Popular This Week

Request for Proposal

- Advertisement -

Latest Articles

Round Table: ETFs & Asset Management

Stockholm (HedgeNordic) – At a round table discussion that took place in Stockholm on October 17, asset managers and ETF providers discussed and answered...

Nordic Managers Win EuroHedge Nominations

Stockholm (HedgeNordic) – With Intelligence has released the first round of nominations for the EuroHedge Awards 2022, with the list featuring seven Nordic hedge...

Expected 75 Point Hike in Riksbank Rate

Stockholm (HedgeNordic) – Sweden’s Riksbank raised the key interest rate by an expected 75 basis points to 2.5 percent, the highest level since 2008....

The Age of Macro is Back

Stockholm (HedgeNordic) – In recent years, fixed-income macro managers such as Carlsson Norén have struggled to deliver attractive absolute returns in a low-volatility environment...

Man AHL Launches its First Systematic Article 9 Fund

Stockholm (HedgeNordic) – Man Group’s quantitative investment arm and engine, Man AHL, has launched the asset manager’s first systematic Article 9 fund. Relying on...

Corporate Bonds are Very Attractive Finds Atlant Fonder

Stockholm (HedgeNordic) – This year’s broad sell-off in the bond market due to aggressive monetary tightening in the fight against inflation may have investors...