Anthony Cowell, partner investment management at KPMG, writes about his expectation for the Cayman Alternative Investment Summit, which will be held on 1 and 2 November at The Ritz-Carlton, Grand Cayman.
The world is more interconnected, more volatile and more unpredictable than ever before. Growth is one the key issues on everyone’s minds, but it is innovation that will ultimately drive future growth. Innovation is essential to create a bigger and brighter future by delivering what clients need. Therefore, the key challenge the alternative investment industry faces is how it will adapt successfully in this rapidly changing environment. This is the underlying theme of the 2012 Cayman Alternative Investment Summit and I am looking forward to a thought provoking debate from some of the world’s leading alternative investment managers, institutional investors, economists and academics about the industry’s ability to thrive through transformative initiatives.
As well as debating how the industry can develop a culture of innovation, broader topics such as the structural issues facing Europe, the role of emerging market economies and the increase in regulation will also feature in the agenda. The industry is definitely going through a period of transformational adjustment to a very different and more regulated operating environment. It will be interesting to learn from the world’s largest institutional investors as to whether or not regulators are getting it right.
With regulation comes changes to investor sentiment and accordingly, we are already seeing the future being written – larger firms are building organisational cultures that anticipate clients’ needs and expectations and ignite innovation. Some managers recognise that clarity in clients’ expectations will help them in the longer term make the appropriate strategic and investment decisions. These managers are also those who are listening to clients needs, rather than pushing products onto them; aligning interests in terms of fees and initial seed capital, increasing communication with investors through more frequent calls and meetings, and segmenting clients to match needs and wants. Permanent Capital is becoming the holy grail to the investment world.
In the hedge fund industry alone, the post-2008 influx of institutional money has resulted in a marked increase in operational sophistication and transparency to investors, as outlined in a recent report by KPMG International and the Alternative Investment Management Association. The report, entitled “The Evolution of an Industry” was based on a survey of and in-depth interviews of 150 hedge fund management firms globally with more than US$550 billion in combined assets under management. It found that hedge fund management firms have improved their operational infrastructure in areas like investor transparency and regulatory compliance as allocations from institutional investors have increased.
Seventy-six per cent of respondents have observed an increase in investment by pension funds since 2008, while institutional investors as a whole, including funds of funds, accounted for a clear majority (57 per cent) of assets under management.
The combination of an increase in regulation, the changing nature of the investor base, and the natural evolution of the business has made the industry nearly unrecognisable from only five years ago.
As well as a thought provoking agenda and exceptional speaker line up, the Summit will provide a dynamic forum for collaboration and networking between attendees, speakers and influential business leaders. My hope is that the debate will help produce some valuable insights that we can all take back to our organisations to help meet the challenges we all face. It’s an exciting event and as major sponsors, KPMG are proud to be helping to lead it.
For more information visit CaymanAI.com