Hedge fund trends: Overcoming negative trends with fund administration outsourcing

The year 2016 has seen an interesting mix of positive and negative hedge fund trends. But it has mostly been the negative trends that have taken the spotlight recently.

In the last couple months of the year, news on hedge funds have mostly taken a downbeat tenor. Financial blogs and news sites looked solely on exorbitant fees, poor performance, and how some companies have left the fold after being unable to cope with the challenges. Many resources tend to operate under the belief that the only news worth reporting on is bad news, and do not make an effort to look at hedge funds without anything coloring their view of them.

That’s not all, as far as esteemed publications reporting negatively on hedge funds is concerned. Last month, for example, there were some doom-and-gloom reports predicting that a move toward alternative commodity, credit, and currency vehicles with lower fees may result in a “hedge fund apocalypse” in the coming years.

“The move to investment vehicles with lower fees is a more secular trend and is certainly not limited to hedge funds,” wrote Bob Bryan in a Business Insider report from May 2016. “But the push for lower fees … will hit the income of funds that are already struggling to make gains in the market.”

Despite all the negativity, there have also been some rays of hope in the hedge fund space in the past months. In May, the HFRX Global Hedge Fund index ticked up 0.5 percent, as event-driven traders made the most out of the variables present at the time. These variables, according to GAM portfolio manager Anthony Lawler, included supportive equity pricing, and were responsible for the HFRX Event Driven Index rising by a very respectable 2.7 percent.

The hedge fund trends may be mixed at best, and that does not help lower the stakes in an industry such as the hedge fund space. But asset servicing companies can arm hedge funds with one key tool to help them survive any kind of challenges in the market – integrity.

Experienced asset servicing companies help hedge funds run their back office and middle office in a reliable and transparent way, and help them cut down on costs and human error by means of proprietary technologies and strategies. All this, in turn, gives investors more confidence in hedge funds, regardless of what the current reports on these funds may be.