GPP: concerns over hedge fund performance are short-term
22 January 2019 London
Image: Shutterstock
Concerns over hedge fund performance in Q4 2018 are short-term and dramatically overplayed, according to Sean Capstick, head of prime brokerage at GPP.
Capstick affirmed that the terminal decline of the hedge fund industry 鈥渋s a recurring theme which has failed to play out鈥�.
He indicated recent outflows are unremarkable given the industry鈥檚 scale and 鈥渢he opportunity for large banks to grow their prime brokerages is significant鈥�.
鈥淒espite oft-discussed pressures on fees, performance and reporting, the industry has doubled in size since the recession and reached a peak of $3.6 trillion at the end of Q3 2018.鈥�
Capstick discussed how in recent months a number of investments banks have signalled their intentions to grow prime broking operations and revenue, capitalising on a hedge fund industry which, contrary to reports, is in good health.
Capstick explained though a greater choice of service providers is obviously positive for hedge fund managers, most bank鈥檚 attention will remain on the largest managers responsible for more than $1 billion of assets.
However, he stated this is not to say that large banks won鈥檛 take the occasional risk on smaller managers.
He said: 鈥淲hile the focus will be on the billion dollar stars, some banks will support managers with potential to rapidly achieve scale, with the right to withdraw services from any that don鈥檛 subsequently make the cut.鈥�
He added: 鈥淪uch rapid growth will not be practical for the majority of new and growing managers, who will build businesses based on steady and sustainable expansion plans.鈥�
Capstick concluded: 鈥淭he industry has seen some high profile hedge fund closures in recent months, but emerging managers with innovative strategies are constantly coming through to take their place.鈥�
鈥淚n order to keep the hedge fund industry healthy we need a steady supply of patient prime broking services for managers of all sizes, but particularly at the entrepreneurial end of the scale where today鈥檚 startup could be tomorrow鈥檚 billion dollar giant.鈥�
Capstick affirmed that the terminal decline of the hedge fund industry 鈥渋s a recurring theme which has failed to play out鈥�.
He indicated recent outflows are unremarkable given the industry鈥檚 scale and 鈥渢he opportunity for large banks to grow their prime brokerages is significant鈥�.
鈥淒espite oft-discussed pressures on fees, performance and reporting, the industry has doubled in size since the recession and reached a peak of $3.6 trillion at the end of Q3 2018.鈥�
Capstick discussed how in recent months a number of investments banks have signalled their intentions to grow prime broking operations and revenue, capitalising on a hedge fund industry which, contrary to reports, is in good health.
Capstick explained though a greater choice of service providers is obviously positive for hedge fund managers, most bank鈥檚 attention will remain on the largest managers responsible for more than $1 billion of assets.
However, he stated this is not to say that large banks won鈥檛 take the occasional risk on smaller managers.
He said: 鈥淲hile the focus will be on the billion dollar stars, some banks will support managers with potential to rapidly achieve scale, with the right to withdraw services from any that don鈥檛 subsequently make the cut.鈥�
He added: 鈥淪uch rapid growth will not be practical for the majority of new and growing managers, who will build businesses based on steady and sustainable expansion plans.鈥�
Capstick concluded: 鈥淭he industry has seen some high profile hedge fund closures in recent months, but emerging managers with innovative strategies are constantly coming through to take their place.鈥�
鈥淚n order to keep the hedge fund industry healthy we need a steady supply of patient prime broking services for managers of all sizes, but particularly at the entrepreneurial end of the scale where today鈥檚 startup could be tomorrow鈥檚 billion dollar giant.鈥�
NO FEE, NO RISK
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities 麻豆影视传媒 Times
100% ON RETURNS If you invest in only one securities finance news source this year, make sure it is your free subscription to Securities 麻豆影视传媒 Times
