Most hedge fund managers are optimistic about the rest of 2011, compared to early 2010, when almost 70 percent predicted a rough year ahead, according to an annual report on hedge fund industry trends released Wednesday by the Roseland-based professional services firm Rothstein Kass.
“Even at the height of the crisis, our research found that the hedge fund community remained confident in its long-term positioning,” said co-CEO Howard Altman. “Still, in the face of market uncertainty and regulatory challenges, most managers acknowledged the many obstacles ahead.”
Among other findings, the online survey of 313 hedge fund managers noted more than 85 percent of hedge fund managers “expect institutional investors to be more averse to high concentrations of illiquid portfolio assets,” while more than 80 percent of survey participants “expect institutional investors to continue to exhibit a preference for allocations to larger hedge funds.”
In 2011, nearly 60 percent of managers expect to increase their assets under management, or AUM, by 25 percent or more. In 2010, only 32 percent expected to reach that level.
EisnerAmper LLP tax partner Christian Bekmessian said he’s seeing similar sentiment among client companies.
Some reports predict AUM to reach $2.1 trillion, “which would match pre-recession highs,” said Bekmessian, who provides tax planning and compliance services to hedge funds and other financial services companies.
During the recession, “one of the biggest issues was outflow from their funds,” he said. That’s eased, but “inflows are still going disproportionately to bigger funds with several hundred million dollars or more” under management.
“The biggest issue is new registration requirements,” Bekmessian said. “If you’ve got $100 (million) to $150 million of assets under management, you could have several hundred thousand dollars of upfront costs,” in addition to facing expensive Securities and Exchange Commission oversight that could involve hiring a full-time compliance officer.
E-mail Martin C. Daks at email@example.com