Larger financial institutions will continue to purchase hedge funds, fueling industry consolidation over the next three years, according to a survey by Rothstein Kass, a CPA firm.
The report, “Capturing the Opportunity in Hedge Funds,” states a shift in the environment in which larger funds are targeting institutional money while competition remains fierce among smaller firms for high-net-worth assets, which will likely lead to further consolidation.
Rothstein Kass interviewed senior hedge fund partners at 301 hedge funds with a minimum of five years of hedge fund experience, with assets under management of at least $100 million.
“Hedge fund have grown over the past 15 years to unprecedented proportions, both in number and in assets under management. This sustained growth and financial success have led to an increased in the sector by traditional financial institutions, as they look to acquire hedge fund expertise, said Howard Altman, co managing principal at Rothstein.
Over 67% of senior partners surveyed expected increased acquisition of funds by large financial institutions over the next three years and over 80% of the larger firms were in agreement, the report found.
“To some extent, whether a firm will survive the next wave of consolidation will be determined by its ability to offer investors a clearly defined strategy and greater stability,” Altman said.