Hedge funds are undertaking a cautious approach to comply with regulation due to the complexity of workload involved, according to a study by Deutsche Bank’s Hedge Fund Consulting Group’s of European and US hedge fund managers.
The survey, which polled 44 European and US hedge fund managers representing over US$325 billion in assets under management, showed that the legal, compliance and regulatory matters currently rank as the major contributor to their non-investment workload.
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According to Deutsche Bank’s survey, almost a quarter of US hedge fund COOs have seen an increase of up to 75% in the amount of time they dedicate to such issues.
Simultaneously, hedge funds are taking a wait-and-see approach to comply with the Alternative Investment Fund Manager Directive (AIFMD), with 82% of European managers planning to delay registration until 2014.
The survey found that marketing to European investors continues with 35% of European and 43% of US managers choosing to utilise transitional marketing provisions.
The survey revealed that amount of time COOs globally dedicate to legal, compliance and regulatory matters has increased significantly by up to 50% over the past two years.
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By GlobalDataMajority of managers globally estimated that their non-headcount related costs have increased by up to 25% over the last two years.
The key findings of the survey revealed that more than 40% of managers have hired more than one non-investment full-time employee to help prepare for and manage new regulatory requirements, while 39% of managers are uncertain whether AIFMD will bring additional investment from institutional investors.
Daniel Caplan, European head of global prime finance at Deutsche Bank, said: "The crucial role played by hedge fund COOs has been brought into sharp focus as the regulatory workload continues to mount, and this report provides a valuable insight into how this function has evolved to meet today’s increasingly complex demands."
