Hedge funds are considering outsourcing noncore operations, as well as considering fee reductions in response to operational costs, the complexity of funds and pressure from investors, according to IG Prime, hedge fund and family office brokerage.
In a survey with more than 100 hedge fund managers, around 43 percent report that investment compliance and regulatory requirements are a significant source of pressure, while 42 percent report technology. Rising costs have affected hedge fund profits in recent years, with 45 percent of survey respondents reporting an expected increase in costs by more than 6 percent over the next year.
Regulatory requirements on hedge funds have continued increasing in recent years, leading to growing compliance costs, recruitment challenges and difficult disclosure obligations. One way to address this cost is by outsourcing non-core activities, allowing managers to focus on their fund opportunities and investor relationships.
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