Perspectives on CNBC and Institutional Investor’s Delivering Alpha Conference
It is an interesting time for institutional investors with the upcoming U.S. Presidential election, global economic uncertainty and the alternative investment industry in flux, all themes which were discussed at the sixth annual EisnerAmper-sponsored Delivering Alpha conference, hosted by CNBC and Institutional Investor, which took place recently in Manhattan’s historic Pierre Hotel overlooking Central Park.
This month’s EisnerAmper breakfast series solely for fund managers and investors was a recap of some of the themes discussed at Delivering Alpha. A trio of institutional allocators shared their perspectives on the U.S. economy, concerns arising from the current low interest rate environment, outlook on hedge funds, and view on fees.
- Views on the U.S. economy were mixed amongst the panelists. On the one hand, some said it is on the road to recovery with better employment data. However, others view the economy as segmented; specifically, given the increase of M&A activity, employment is expected to downsize.
- Looking ahead, all the panelists concurred the U.S. economy might enter another recession.
- Institutional investors concurred that it is difficult to find good hedge funds to invest in and have scaled back their investments in this asset class.
- However, some exceptions were credit due to the current interest rate environment, and niche and smaller strategies given their ability to be nimble, with a Delaware appraisal rights offering one example.
- On the heels of scaling back their hedge fund exposure, allocators are eyeing more illiquid alternative investments, specifically mezzanine debt and other private equity strategies.
- Institutional investors will continue to put pressure on managers for lower fees due to underperformance and more are expected to introduce hurdle rates prior to the incentive fee.
- Allocators are not only looking at the management fee, but further, they are looking at funds’ expenses.
- Finally, investors said it is a red flag if a fund entices them to allocate by reducing their management fee more each year if they lock their money up for at least a few years.
EisnerAmper would like to thank the panelists for their time and insights:
- Maria Tarhanidis, Managing Director, Alternative Investments, MetLife Investments
- Robert Maroney, Independent Investment Advisor, Alberta Teachers’ Retirement Fund
- Steven Rubenstein, Investment Committee, Morgan State University Foundation