Asset managers must always be aware of emerging developments in the investment and securities business, to guide their organizational and fund growth strategy. Here are current and future hedge fund trends to take note of:
The growing popularity of advanced cloud-based portfolio management systems. In addition to maintaining a well-trained talent pool, an asset management company needs the right portfolio management system to ensure the smooth running of its day-to-day operations. After all, it will serve as the backbone for various aspects of front, middle, and back office procedures. Best-in-class software should be able to handle all of the following portfolios: multiple 401(k) accounts, brokerage business accounts, investment portfolio accounts, stocks and bonds, derivatives, high-yield savings accounts, fixed assets, and international assets. .
Higher regulatory standards. Around the world, hedge funds are subject to stricter regulations set by industry and governments. The stricter standards are a logical response to the controversies facing the sector, as well as a greater awareness among client-investors on issues of transparency, accountability and corporate governance. While this requires rigorous procedures and increased investment in compliance management, it can also be seen as a great opportunity and motivation to streamline business operations, increase efficiencies within the organization, embrace the best innovations, and hone the skills of everyone. staff and, ultimately, promote the growth of the fund.
Shift to passive investing. The debate between active and passive fund management has been going on for some time. Active management refers to monitoring the market on an hourly basis and buying and selling based on the viability of opportunities that arise. Risk appetite is increased, which, during good market conditions, could lead to higher returns for the investing client. The goal is to generate growth that outperforms the overall market performance. Passive management, on the other hand, only involves monitoring the market, and earnings will only reflect the volatility or stability, if not the bullish tenor of the market. The latter means less risk, and also less fees to be paid, by investors. Today, there is a palpable shift towards passive funds, especially in the field of pensions. Some factors driving this trend include the purchase of companies and the reduction of allocations to shares.
Asset servicing solutions that are equipped with the technology, strategies, and talent to meet the challenges of fund management in today’s era help many companies adapt to these hedge fund trends.