Industry survey: Hedge funds remain resilient amid COVID-19

Research by KPMG and the Alternative Asset Management Association finds that hedge funds have adapted well to the effects of the coronavirus pandemic with many firms continuing to hire and using technology to deal with the new business environment.

Based on a survey of 144 hedge fund managers globally with an estimated $840 billion in assets under management, the report found that they have continued to make strategic hires, as the new decentralised nature of working creates opportunities for managers to reach outside of their normal captive locations in the search for new talent.

More than half of all managers said they have either hired or are looking to hire new talent since the pandemic began.

About 61% believe the flexibility gained by employees working remotely is a positive, with 46% highlighting the benefits of commuting less for employees. Firms also said that they are enhancing their corporate culture by prioritising the mental health and well-being of employees.

Most hedge funds said they are taking a flexible and collaborative approach to developing plans to return to the office, with the need to modify physical work space (64%), train staff on new protocols for hygiene (44%) and commuting concerns (42%) identified as key issues.

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Andrew Weir, global head of asset management, KPMG International, said in a press release, “Our research shows that a good number of hedge funds see this as a time to attract new talent to their firm.

“They are evaluating their existing operating model and adjusting their core processes, cost structures and work environments so they are positioned to grow and meet the changing needs of investors.”

In response to the disruption caused by lockdown measures, more than 80% of respondents said they are investing in digital infrastructure and IT capabilities. This included cyber security measures as well as central data warehouses to facilitate data analysis and reporting.

More than two-thirds (71%) of managers cited the success of operating in the current remote working environment as a catalyst to increase outsourcing operational and technological solutions to improve efficiency, generate cost savings and manage margins more effectively.

Given that face-to-face meetings are now all but impossible, 58% of hedge fund managers said they are optimising their use of digital tools, such as video conferencing and data rooms, to improve investor relations.

“The flexibility and increased frequency of virtual meetings is benefiting both investors and managers and has levelled the playing field between investors and managers of all sizes,” the report found.

Fund managers said they are planning for both opportunities and ongoing disruption. About 20% believe it is time to redefine business models to become more agile and resilient.

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