Institutional investors turning to equities, global markets in 2021

Investors are demanding hedge fund managers increase their due diligence and transparency measures.

In response, hedge fund management firms have increased their operational infrastructure in those areas, says a KPMG and Alternative Investment Management Association (AIMA) report called The Evolution of an Industry.

The report also finds hedge fund management firms have universally increased investment in regulatory compliance since the recession hit, with 98% hiring additional staff in this particular area.

The majority of firms (76%) have seen an increase in investment by pension funds, and institutional investors as a whole accounted for more than half (57%) of their assets under management.

“The combination of an increase in regulation, the changing nature of the investor base, and the natural evolution of the business has made the industry nearly unrecognizable,” says Robert Mirsky, lead partner for hedge funds at KPMG in the UK.

The report is the second of a two-part series by AIMA and KPMG on the state of the global hedge fund industry. The first report—called The Value of the Hedge Fund Industry—was published in April and looked at hedge fund industry performance, risk and volatility.