plenty of sticky money available as well as money managers believe will be around a long time
There is little capacity problem in the hedge fund market, especially for money that managers believe will be around for the long-term.
Sticky money and investors who want a relationship with the manager can even get closed funds to accept assets, said speakers at a the Euromoney London hedge fund conference.
However, some investors are experiencing problems finding capacity because they are chasing the same few experienced managers. According to Stephen Lowe, investment consultant to the Railways Pension Trustees Company (Railpen), a UK rail pension fund that is interested in hedge funds but yet to invest, there is 'clearly capacity' in hedge funds.
'It was a concern a year-and-a-half ago, but it is not really an issue now,' he said.
While a number of hedge funds are closed, the pension fund has found room, particularly in funds of hedge funds.
'If we tell them we can only speak if there is room for at least $50m, they never have a problem,' he said. Clare Flynn, chief investment officer at Avocet Capital Management, said hedge funds are keen to attract 'sticky money' from investors who are taking a long-term view.
That means they might lean towards institutional money that is more likely to stay put.
Investors prepared to work with the fund manager may also be welcomed 'because we are always looking for a niche advantage,' she added.
Investors looking for a track record can experience capacity problems because there are many chasing few opportunities, she said, but there are plenty of good new fund managers out there too.
Robbert Coomans, of Stichting Pensioenfonds ABP, the pension fund for government and education authorities in the Netherlands, said he has experienced some capacity problems because of the size of the fund, which has targeted $1bn to invest in hedge funds this year. However, capacity can be found even in closed funds, he added. Many closed funds have been invested in by high net worth individuals and welcome more stable money, he said.
It also encourages a manager to take more assets under management if the investor agrees to work with them on setting up research programmes, he added. Because of this, investors should be aware of capacity limits because many managers are not disciplined enough to refuse more assets under management, she added.
Patience must be a watchword
'Misleading, unclear, unfair' promotions
Will extend to wider models
1,414 in 2017/18
UK Multi Cap Income sees success