CEO blog: October 2018 notes

By Jack Inglis, CEO, AIMA

Published: 08 October 2018

Dear members,

As we move into autumn, it’s a busy time at AIMA. Last month I headed Down Under to attend our annual investor forum in Australia. This year’s event drew a record number of attendees for our AIMA Australia events, with over 400 delegates of managers, investors and service providers.

One of the most anticipated speakers was Nobel Gulati, CEO of Two Sigma Investments, who chatted with me on stage and provided a fascinating insight into their business and how he perceives the future of investment management. A hedge fund's competitive advantage, he suggested, would no longer be found just in its ability to source unique data sets, but in the differentiated engineering capabilities needed to sort and interpret them.

In a new initiative for AIMA, we also launched the first Australian student-run hedge fund (Australian Students Asset Management) which has been set up as a registered charity. In keeping with heightened responsibility concerns, the fund’s initial strategy is ESG focussed and is generously being supported by a group of investors and service providers on the ground. In providing students with this immersive fund management experience, we hope to attract and nurture human capital for the industry.

I had the opportunity while there to meet with several superannuation scheme investors and have also been speaking to some of our other institutional allocator members in recent months. There is a general lack of conviction in further upside for equity and bond markets and thus a continued commitment to alternatives broadly. This is backed up by the results of recent investor sentiment surveys from Credit Suisse and JP Morgan which show that appetite for hedge funds remain strong. In private, some investors have been telling us that, overall, they’d like to find managers who accept a little more risk to boost returns, while admitting that they might have been the ones in the first place to have requested lower risk profiles. Average hedge fund performance measures for the year may look rather modest but investors in aggregate continue to build their exposures.

Elsewhere in our investor engagement, I head off to our AIMA Canada Investor Forum in Toronto on 29-30 October. Attendees will have the chance to meet with large hedge fund investors and hear directly how they currently view our industry. I am particularly pleased to attend this year as AIMA Canada celebrates its 15th anniversary and at a time when new legislation will permit Canadian retail investors to have access to hedge funds for the first time.

Before that, we are holding our annual London AIMA Spotlight event in London on 11 October. This year we are shining the light on alternative UCITS. Hedge funds in UCITS wrappers have been growing rapidly and now make up a substantial part of European assets. Panels will offer their insights on running a successful UCITS strategy, who buys them and how to stay ahead of important risks to delegation and distribution post-Brexit. With the added attraction of our annual cocktail reception afterwards, I hope to see many of you there.

I recently spent a full day with the new AIMA Council for the 2018-2020 term as we discussed AIMA’s strategy and priorities for next year. We have some key initiatives in place which will all serve to enhance member value and experience, and you will hear more about these in due course. I’d like to thank our governing body who provide hugely valuable input and guidance to the work that we do.

In recent weeks, we have worked on three new publications. The first of these, ‘Making it Big’, which we have done in conjunction with GPP, will be published later in the week. This paper provides insights from established managers who blazed a trail in building a billion-dollar hedge fund business and offers a road map for all emerging and start-up managers as they make their way up the AUM scale. The work is particularly relevant to our Acorns of APAC event, being hosted in Hong Kong on 11 October for emerging managers.

We also published, in tandem with CAIA, the fourth instalment in our series of trustee education, Efficient Flows: Understanding Liquidity in Alternative Investment Funds.

A final word on Brexit:  we have conducted a member survey which provides useful insights on their state of readiness for the leave date next March and how they foresee their future regarding personnel and activities in the EU. It’s an interesting read and should be out shortly.

Halloween is not far away. In the meantime, I wish you all success.