EisnerAmper’s 6th Annual Alternative Investment Summit: The Future of Hedge Funds

Hedge fund managers have to take into account many considerations to be successful and responsible fiduciaries to their limited partners (LPs). EisnerAmper’s 6th Annual Alternative Investment Summit What’s Around the Bend: The Future of Alternative Investments, a virtual event which took place October 7, featured speakers with a variety of backgrounds in the hedge fund, private equity, family office, and venture capital space. The hedge fund panel, titled “The Future of Hedge Funds,” focused on important topics that fund management and investors should consider when it comes to investments while navigating this changing, post-pandemic world. Environmental, social, and governance (ESG) issues, investment strategies poised to be more prominent, and disruption in working environments were among the topics the panelists discussed. The panelists included:  

Alan Reid, Founder and Managing Partner, rPartners Paul Glazer, CEO and Chief Investment Officer, Glazer Capital Scott Radke, Chief Executive Officer, New Holland Capital Simon Fludgate, Head of Operational Due Diligence, Aksia, LLC Moderated by Katie Brandtjen, Partner, EisnerAmper

Environmental, Social and Governance (ESG)

Panelists concurred that ESG has been an area of increased focus within the last few years. In the hedge fund industry, ESG concerns are not only becoming increasingly prevalent in constructing portfolios, but also with regards to diversity of staff and management.

“ESG is very much in the eye of the beholder,” Reid said. “I think that one of the challenges is that very few people share the same or similar values on all fronts.”

ESG standards seem to be quickly evolving and are up for interpretation on an individual level. However, it is very likely that management will continue to incorporate some form of ESG at both a firm and fund level.

Strategies Moving Forward

Looking forward, investors should expect to see hedge funds moving toward diverse investment strategies. The panelists touched on investments they anticipate to be more prominent in the coming years, which included private investments, IPOs, and SPACs.

Although these investments are not new, they are becoming more attractive to hedge funds, which previously focused predominately on public equities. This shift is due to increased opportunities.

“There are now 400 SPACs outstanding as opposed to maybe 40 or 50 before this all started in late 2019, and SPACs have become legitimate.” Glazer said, regarding the increase in SPACs since the pandemic.    

The panelists also see an uptick in investments in the cannabis industry, cryptocurrency, and specifically investments in Asia as a whole.

Work Environments

When it comes to work environments and their disruption due to the COVD-19 pandemic, hedge funds are no different than other companies. The transition to a virtual work environment has impacted many funds. The panelists discussed pros and cons to this new age of work-from-home (WFH) life.

Increased flexibility seems to be something that people value more since working from home.

“We are going to go to some kind of hybrid model, most likely going forward,” Fludgate said. He realized that working from home can be just as productive as working in an office. In addition, during the pandemic, firms found ways to make due diligence more effective remotely with many virtual tools that make sharing, accessing, and protecting information efficient and effective.

With a more virtual work environment, there are also ongoing issues a hedge fund is likely to face. Creating culture, maintaining and developing meaningful relationships, and acquiring new investors are a few examples of challenges they may face.   

Looking ahead panelists urged caution with liquidity, asset liability mismatch, and cybersecurity.

To view the panel, please click here.