Apr 26, 2010
NEW YORK and LONDON, April 26, 2010 — BNY Mellon, the global leader in asset management and securities servicing, and Greenwich Associates, the leading financial services consulting firm, have today published a new study that examines the current and projected future state of convergence between traditional long-only investment managers and hedge fund managers.
The study – 'Breaking Down the Walls' – draws on 71 in-depth interviews with traditional investment managers, hedge funds and institutional investors. It concludes that, despite having accelerated in the wake of the financial crisis, convergence between traditional asset managers and hedge fund managers remains an emerging trend. While investors perceive several advantages in traditional managers running hedge-like strategies, they recognize that hedge funds maintain certain competitive advantages in managing long-only strategies.
Key findings include:
Jim Palermo, co-CEO at BNY Mellon Asset Servicing, said: "Changes to hedge fund structures and policies are beginning to erode some of the historic distinctions between hedge and long-only funds. The most important and obvious example of this trend is the move by hedge fund managers to provide investors with enhanced levels of transparency and broader disclosure. In the post-crisis environment, hedge fund managers find themselves responding to their clients' demands for transparency down to the portfolio holdings level as part of new risk management efforts."
Brian Ruane, CEO of BNY Mellon Alternative Investment Services, added: "One clear finding in this study is that convergence of any type is fostering a greater reliance on external service providers. Whether through enhanced integration of front- and back-office functions or delivering greater transparency to investors, all fund managers will increasingly look to these value-added services to remain viable in the years ahead."
Andrew McCollum at Greenwich Associates, said: "The results suggest that managers of all types should remain open-minded to best practices from across the industry. Hedge fund managers should be looking to emulate the strengths of traditional managers, including their powerful brands and transparent processes. Traditional managers, meanwhile, should be looking to build up and demonstrate the capabilities in hedge strategies and to increase their ability to react quickly to market changes and opportunities."
Breaking Down the Walls can be found at www.bnymellon.com/foresight/pdf/convergence.pdf
BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 34 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, providing superior asset management and wealth management, asset servicing, issuer services, clearing services and treasury services through a worldwide client-focused team. It has $22.4 trillion in assets under custody and administration, $1.1 trillion in assets under management, services $11.8 trillion in outstanding debt and processes global payments averaging $1.5 trillion per day. Additional information is available at www.bnymellon.com.
Greenwich Associates is the leading international research-based consulting firm in institutional financial services. Greenwich Associates' studies provide benefits to the buyers and sellers of financial services in the form of benchmark information on best practices and market intelligence on overall trends. Based in Stamford, Connecticut, with additional offices in London, Toronto, Tokyo, and Singapore, the firm offers over 100 research-based consulting programs to more than 250 global financial services companies. Additional information is available at www.greenwich.com