BOSTON (HedgeWorld.com)–Growing focus on alternative investment products is a major driver of change in the traditional fund industry, according to a study of 185 investment managers in 20 countries conducted by accounting and tax services firm KPMG International and think tank Create.
Money managers now are listening more to demands from consumers, said John Capone, a partner at KPMG’s investment management and funds practice. “One change is providing alternatives to standard equity, as clearly shown in hedge funds and income products,” he remarked.
Polled asset management executives in Asia, Europe and the United States see a need in their industry for change that goes beyond cost cutting and product diversification. From this point of view, while the move into hedge funds and other alternatives such as guaranteed products has been significant, bringing about innovation and new attitudes within their own organizations remains a challenge.
Much of the change is a response to customer disappointment with performance and demand for more effective risk management and higher or absolute returns. Nearly 60% of the managers said their company became interested in hedge funds for institutional investors during the stock market slump, and around 50% said they considered hedge funds for retail investors.
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But the majority regards the popularity of hedge funds and bonds as a cyclical phenomenon, while the growing importance of guaranteed products and passive funds is considered a more durable shift.