Circle Squared President & CIO, Jeff Sica was featured in Fundfire.
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- “The hedge fund industry is starting to realize it may have to respond to investors’ growing interest in liquid alternative strategies.”
- “It’s sort of a double-edged sword for hedge funds. They believe they have a superior structure because there are no trading restrictions and they can attract higher levels of talent because their fees are higher. But they are responding to more resistance because investors are less likely than in prior years to go into hedge funds.”
- Indeed, hedge funds are “taking a lot of heat over fees” and their recent inability to deliver uncorrelated returns, Sica says. Hedge funds may have to wait for an ugly market before they can prove their mettle again, but until then, many must “endure the lack of assets from performance chasers,” he says.
- Others may simply try to play on both sides of the market, however. Indeed, a number of hedge fund firms have responded to the growth of liquid alts funds by developing their own products, or through sub-advisory relationships. While some of them have garnered big assets, hedge funds may run the risk of cannibalizing their private fund strategies, Sica says.
- “I don’t think it’s a good move for them. But they may not have a choice. They’re not attracting dollars, they’ve had massive redemptions and people don’t want to pay as much. They are fighting for their survival.”