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'Money in Motion' as Allocations Shift to Chase Performance

The long bull market and a wave of large hedge funds experiencing performance challenges have been prime factors leading investors to move capital around, says Stuart Blair, director of research at Canterbury Consulting.

“It became apparent a lot of hedge funds were investing in the same securities, and that folks had exposure to the same securities across multiple portfolios,” he says.

Lukewarm hedge fund performance in 2015 and 2016 also has given investors the upper hand to renegotiate fees with managers. Cambridge Associates reported renegotiating fees and terms for almost 80 hedge funds over the last year. Investors are starting 2017 with a bit of a leg up at the negotiating table when it comes to managers beyond big names such as Bridgewater Associates and Elliott Management, Blair says. He expects money to stay in motion in the hedge fund space during the year.

“Just because folks are moving money around… that does not mean the asset class is dead or doomed. It just means the best will survive,” he says.


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