Mid-sized hedge funds, those in the neighborhood of $100 million to $500 million in assets, are facing a squeeze, according to an article in HedgeWorld. That’s because only 22 percent of the mid-sized hedge fund firms surveyed by Greenwich Associates have more than one full-time employee devoted to client service, and only 9 percent have highly automated reporting systems.
Attracting investments from large institutional clients will increasingly require more attention to client service, and a significant investment in technology to improve reporting capabilities.
Having a client service team dedicated to institutional investors is “critically important” for winning and maintaining that business, according to the survey. Funds with two or more full-time sales professionals won more mandates than firms without as many dedicated sales staff.
“Mid-sized funds represent a significant segment of the hedge fund market, and they are facing unprecedented pressures. These funds need to analyze the necessary steps for developing best practices at their organizations if they want to attract institutional assets,” commented Alan Alzfan, a managing director in the financial services group at professionals services firm RSM McGladrey.
Such steps include increasing marketing staff from an average of 1.5 to two full-time employees. And investing in systems and infrastructure to demonstrate to institutional clients that they have the necessary reporting and checks and balances in place. There may also be a new emphasis on allowing greater liquidity and reducing lock-up periods, as a means of attracting these investors.
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