Hedge Funds Moving Into The Mainstream

by Philip Morton, Investors Offshore.com

04 March 2005

The alternative investment industry is in the midst of a transition from a small, relatively obscure part of the investment industry into a mainstream component of the wider asset management universe, according to Antoine Massad, Middle East and Asia associate director at Man Investments.

Speaking at the Hedge Funds World Middle East 2005 conference this week, Mr Massad observed that after a period of rapid growth, the hedge fund industry is now likely to undergo consolidation, although he foresaw that growing demand for hedge funds will continue to be seen in the Middle East.

“The alternative investment industry is at the point of making the transition from a boom industry to becoming a mainstay of the asset management industry,” noted Mr Massad.

“The next five years will bring greater regulation, consolidation, standardisation of IT and reporting, and increasing regionalisation of products. Hedge fund providers will have to adapt to this new environment and only those who have the capacity to invest in research and product development and in exploring new markets and opportunities will survive this transformation,” he added.

Massad predicted that investors in the Middle East will increase their hedge fund allocations by 8% to 10% over the next decade, the bulk of which is expected to flow into funds of hedge funds.

“In this environment, funds of hedge funds will differentiate themselves through their ability to deliver innovative product structures and access premier investment capacity,” he suggested.

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