New research from 100 leading hedge fund managers reveals a healthy environment for hedge funds and an industry where technology and data are increasingly central to staying competitive.
-
83% anticipate an increase in allocation to hedge funds
-
95% believe accessing high quality data and cutting-edge technology is key to generating alpha
-
85% anticipate a rise in the trading of digital assets
-
95% expect an increased use of quant analytics by discretionary managers
SigTech conducted a global survey1 of hedge funds from the US, Europe and Asia with $194 billion in assets under management collectively. The report provides insights into major trends reshaping the industry.
Increasing demand for hedge funds
Four out of five managers expect institutional investors to increase their allocation to hedge funds over the next two years. This is predominantly due to hedge funds being expected to generate absolute returns, mitigate risk, and improve overall portfolio diversification irrespective of prevailing market conditions.
Discretionary managers are embracing systematic analytics
The digitisation of the investment industry has long been an observable trend and shows no signs of abating. To avoid obsolescence, discretionary funds show a strong propensity to systematise parts of their investment processes, be it in the widening of their product range to include quant funds or the integration of systematic analytics.
High quality data and technology essential to generate alpha
Hedge funds are increasingly focusing on improving the quality of data and accessing new technology to make investment decisions. Nine out of ten managers consider it central to generating strong investment returns.
Strong trend for outsourcing
There is strong momentum among hedge funds to increase outsourcing of data services. The specialist skills needed to manage data and the increasing cost of acquiring those skills makes outsourcing an increasingly viable option, freeing managers to concentrate on what matters most: alpha generation.
Given the recent turmoil in the financial markets, hedge funds are in a prime position to show their true value for investors; having the ability to deliver absolute returns in any market environment. However, to stay competitive and to profit from the general quantification of the industry, hedge funds need to continue investing in new technology and data.
Citations:
[1] SigTech commissioned the market research company Pureprofile to survey 100 hedge fund managers across the US, Europe, and Asia. Interviews were conducted online in Q2 2022.
Disclaimer
This content is not, and should not be construed as financial advice or an invitation to purchase financial products. It is provided for information purposes only and is subject to the terms and conditions of our disclaimer which can be accessed here.
