Crestbridge has released a new survey highlighting the challenges facing the alternatives fund management industry.
The survey, the Crestbridge Alternative Managers’ Mood Index, revealed that hot topics for investors during the fundraising due diligence process were cybersecurity (71.43%) and ESG (57.14%), as reported by fund managers from a cross-section of alternative asset classes who participated in the survey. This highlights the growing importance of these issues in the industry and the increasing pressure on fund managers to address them.
Alex Di Santo (pictured), Global Head of Private Equity for Crestbridge explained: “Cybersecurity is an issue of growing significance for fund managers and their investors. With the increased use of technology in the industry, fund managers are taking steps to protect their data and systems from cyber threats and are expecting their business partners to do the same. Similarly, ESG continues to be a key consideration for investors and fund managers must be able to demonstrate increased commitment to ESG in order to attract and retain investors.”
Compliance and regulatory support was also a concern for 46.15% of the respondents.
According to Cheryl Bai, Head of Funds UK for Crestbridge, with global regulations and compliance standards constantly evolving, keeping up with the latest developments can be challenging: “This is especially true for smaller firms or those who have not yet scaled, that may not have the resources to dedicate to regulatory compliance. The survey highlights the need for some firms to seek out support where necessary to ensure that they remain compliant with global regulations and meet investor expectations.”
Alex Di Santo added: “As the industry continues to evolve, it’s important for fund managers to stay ahead of the curve and address these key challenges. At Crestbridge, we’re dedicated to helping fund managers navigate these issues and build a successful and sustainable business.”
The biggest internal challenge faced by managers in running their funds is sourcing and retaining talent, with over a third (35.71%) citing this as an issue for them. The Great Resignation started around 2021 but managers are still indicating they are expecting this to be an issue through 2023. This is an issue which affects not only all asset classes, but the wider financial services industry and other industries as a whole and it is not specific to any single jurisdiction.
Achieving operational efficiency was cited as a challenge by over a fifth (21.43%) of respondents. Operational efficiency refers to activities like streamlining processes, improving communication within the business and finding ways to reduce costs. By optimising internal processes and leveraging technology to streamline operations and reduce costs, investment fund managers can improve their competitiveness and increase their chances of success.
However, this requires a sustained effort to identify areas of inefficiency, implement changes, and measure results over time.
Other challenges mentioned in the survey include managing data for both the business and investors (14.29%), keeping up with technological innovation (14.29%) and regulation and compliance (14.29%).
The full study can be found here.
