Top Industry Trends in 2016 for Hedge Funds and Beyond
With a new year brings new excitement and new ambition. Across the hedge fund and alternative investment industry, firms are devising new strategies and implementing plans to drive growth and increase returns. In 2016, we expect the following industry trends will play a role in shaping many of the decisions hedge funds and other investment management firms make.
Hedge Fund Cybersecurity 2.0
Last year, cybersecurity took center stage across the investment community, and there is little doubt that it will continue to dominate in 2016. If we can assume that firms used 2015 to shore up security practices and have, at minimum, established a baseline for protecting firm assets with firewalls, password protections and penetration testing, we can expect 2016 to take cyber preparedness to the next level in the form of advanced features and analytics including phishing and social engineering tests, designed to increase the level of preparedness held by firm employees. With cyber-attacks increasing in sophistication, firms will need to spend time in 2016 working with managed providers and internal IT teams to continue the education process and identify strategies to outsmart hackers.
Marketing & Brand Awareness
Previously a non-factor for hedge funds, marketing is now a critical element to any firm’s success. In 2016, hedge funds and investment firms will need to develop comprehensive marketing strategies in order to elevate their brands, attract new investors and retain capital. Whether via traditional marketing campaign tactics such as pitch presentations, websites and CRM systems or more modern avenues such as social media, firms would be wise to think through their objectives, plans, and communication methods before outreaching to potential investors.
Family Office Transition
One trend that we noticed in 2015 that we may see extend into the New Year is the transition some hedge funds are making into the family office spectrum. Several prominent former hedge fund managers returned outside money in recent years and began operating as family office firms, most notably Steve Cohen and George Soros. And while there are less regulatory pressures and expectations to meet as a family office entity, security measures should remain enterprise-level, and we expect to see family offices investing heavily in cyber preparedness policies and systems.