KPMG, AIMA study hedge fund resilience in time of COVID

Hedge fund managers are finding new ways to work, and in fact more than half are hiring during the uncertain and uncomfortable times all companies are now grappling with as the COVID-19 pandemic rages on.

A new survey of 144 hedge fund managers representing $840 billion in AUM was released by KPMG International and the Alternative Investment Management Association. The groups found a large majority of hedge funds (81%) are investing in digital and IT capabilities as the industry is embracing hybrid models of working.

According to the report, Agile and Resilient: Alternative investments embrace the new reality, nearly 60% of hedge fund firms globally have hired or have been seeking to hire staff during the pandemic.

Like all businesses, hedge fund firms have faced a multi-faceted set of challenges due to the new work from home environment. Roughly two-thirds or 61% see the flexibility gained by employees working remotely as a positive with 46% viewing the benefits of employees commuting less. Many (71%) also see the current remote working environment as a catalyst to increase outsourcing of operational technological solutions to improve efficiency, promote cost savings and manage margins more effectively.

Still an increasing reliance on technology is not without complication and spend. Half of all firms said they were investing in cyber security measurement and one-in-three said they are building a central data warehouse to facilitate data analysis and reporting.

“Ultimately, hedge funds will find the right balance of a more decentralized environment with the necessary face to face interaction in the office,” said Joseph Fisher, senior partner of Asset Management at KPMG in the US. “The ability to collaborate will unquestionably be a prime consideration as firms continue to adapt to the new reality.”

Of course, part of that new reality includes virtual meetings, especially with current or prospective investors. Nearly 60% of fund managers say they are using digital tools such as video conferencing and data rooms to improve their investor relations model. According to KPMG and AIMA, the flexibility and increased frequency of virtual meetings is benefiting both investors and managers alike – leveling the playing field between investors and managers of all sizes.

On the question of safely returning to the office, most agree that they will need to modify the physical workspace and train staff on new hygiene and sanitation protocols. Roughly 40% identified commuting concerns as one of the key issues in abandoning their home offices.

“The COVID-19 experience has proven that hedge fund managers operations’ and their ecosystems are robust and fully adaptable, even during the most severe of lockdowns,” said Tom Kehoe, AIMA’s global head of research and communications.

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