Trends Watch: September 15, 2016
September 15, 2016
EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies Snyderman.
This week, Elana talks to David Steinschraber, Managing Member of DAS Capital Group
What is your outlook on the alternative investment industry?
At the end of the day, "alternatives" are rarely alternatives but simply a fee mechanism. There is very little creative stuff going on in "hedge funds." The large funds ($10 billion plus) are simply fee gathering mechanisms and I would expect further redemptions and fee compression, which is fine. Meanwhile, I do think there are opportunities for outsized returns in smaller funds. The problem is the institutional allocators only want to be in the large funds that meet all their DDQ and infrastructure requirements.
The allocators need to get realistic. If you want excess returns you will need to roll down the AUM curve and take some business risk. Otherwise stop complaining that an $18 billion fund can't make 20% a year -- that's $3.6 billion a year in trading profit, and it‘s not going to happen.
What are the next steps for the EU post-Brexit?
Ideally, the EU starts to break up. This centralized socialist political system is highly fragile and an elitist academic dream. I would expect more countries to peel off one by one starting with Ireland.
What keeps you up at night?
Lack of AUM. Neverending increasing costs and laws of living in New York City. Time to get out.