EUROPE – PricewaterhouseCoopers says hedge funds may be able to help address the European pensions “time bomb”.
“Hedge fund managers can play a pivotal role in influencing European regulators,” PWC said in a report on the European hedge fund industry.
“In the current bear market, regulators need to be seen to be considering ways in which investors can obtain access to alternative types of products which may assist, for example, in addressing issues associated with the European pensions ‘time bomb’.”
The report added: “Substantial regulatory change is on the horizon, but will it always be beneficial for the hedge fund industry?”
It said that hedge fund managers should “actively seek” consultation with European regulators. “Workable and beneficial solutions must be developed so that the industry can benefit from a framework that is competitive with the US.”
The report also saw “increased demand” from pension funds and life insurers, with hedge funds becoming available to the “mass affluent” and retail markets.
It said: “On the demand side, a wider group of investors is becoming aware of the potential for achieving positive returns together with capital preservation.”
Meanwhile, Mercer Investment Consulting says a lot of institutional investors are now considering hedge funds. "Based on what we‚re hearing from our clients, we expect initial allocations to grow over time as clients become more comfortable with hedge funds," said John Frede, who heads Mercer IC’s US investment manager research group.
Mercer said it expects the hedge fund market to reach one trillion dollars “much sooner” than the five-10 years predicted by the Securities and Exchange Commission.
Mercer IC said, “the most compelling reason to invest in hedge funds is to capture the alpha created through hedge fund manager skill”.
Standard & Poor’s said today that hedge fund performance, as measured by its hedge fund indices, “showed losses across the board” in May. The main S&P Hedge Fund Index, which tracks the performance of nine major hedge fund strategies, was down 0.68%.