Megatrends are fundamentally shifting the alternative investment industry. Changing demographics, new technology, the environment, and altered social values and behavior will affect the $7.5 trillion industry, which encompasses hedge funds, private equity funds, real estate and infrastructure, according to Anthony Cowell, the head of Alternative Investments at KPMG in the Cayman Islands.
Speaking at the opening of the Cayman Alternative Investment Summit at The Ritz-Carlton, Grand Cayman on Thursday, he said there will be huge generational shifts in demographics. “For all of history, the world has been dominated by children, and that’s going to change. The population is aging.”
Social values and behaviors are now being monitored and big data analytics, such as DataMinr – which collects information on hundreds of millions of Twitter users every day – are used by hedge funds, among others, to predict client behavior.
Philanthropy has been another massive change in the industry, with the generation of millennials having benefited more from philanthropy than any other, Mr. Cowell said. In this context, Friday’s program will feature Sir Richard Branson and other panelists debating the changing dynamics of giving and how to blend social and economic development.
Mr. Cowell, who helped develop the conference agenda, said the two-day industry forum that brings together institutional investors, fund managers, economists and regulators will set the course for a new vision for the alternative investment industry. “We’ll showcase innovations that are being implemented and highlight areas where innovations are essential.”
Innovation that drives future growth, what clients need, and innovation that rebuilds robust business models, as well as the speed of new product creation, will continue.
For the alternative investment industry, Mr. Cowell said he sees three main trends. There is a growing convergence between traditional and alternative assets, partly as a result of new regulations which brought new products, with alternative managers launching, for example, more liquid investment products, and traditional managers venturing into the alternative space.
Institutionalization has radically transformed the industry over the past 15 years, he added. Now, more than 80 percent of investors in the alternative investment space are institutional investors. This has changed the balance of power and produced more transparency, liquidity, flexible products and greater control. Investors are also demanding a more personalized service and more simplicity in the investment portfolios.
In addition, Mr. Cowell said his firm sees more consolidation and collaboration across the value chain from administrators, directors and service providers to brokers.
The Alternative Investment Summit featured Hollywood actor Al Pacino as a guest speaker in the afternoon. The conference continues Friday.