Key Takeaways
- • Savvy Investor curated five flagship white papers across hedge fund research in 2016, covering asset allocation trends, manager-investor alignment, factor investing strategies, and market outlook—representing the most downloaded institutional research on alternative investments that year.
- • Willis Towers Watson's Global Alternatives Survey (July 2016) analyzed ten alternative asset classes across 99 pages, benchmarking hedge fund allocation preferences among different investor types and identifying top-tier alternative asset managers by category.
- • AIMA's alignment study surveyed 120 respondents managing over $500 billion in assets, focusing on structural mechanisms and contractual arrangements designed to synchronize hedge fund manager and investor incentives.
- • Cambridge Associates challenged conventional hedge fund allocation thesis in February 2016, questioning whether the industry's historical performance premium justified continued institutional exposure amid structural headwinds.
- • Factor investing and hedge fund strategy replication emerged as critical research focus, with EDHEC's 62-page analysis exploring whether alternative risk premia could be systematically harvested outside traditional long/short hedge fund vehicles.
Summary
Savvy Investor, a research platform aggregating over 12,000 white papers for institutional investors, published a curated selection of five influential hedge fund research documents in 2016. These papers addressed core questions facing allocators: whether hedge funds remained worthy vehicles for capital, how manager-investor interests could be better aligned, and whether alternative risk factors could be replicated more efficiently outside traditional hedge fund structures.
Willis Towers Watson's Global Alternatives Survey, released in July 2016, provided the most comprehensive market overview. The 99-page document examined allocation patterns across ten alternative asset classes—including hedge funds, private equity, infrastructure, real estate, illiquid credit, and insurance-linked securities—while identifying top managers within each category. The survey explicitly addressed how asset owner preferences diverged by institution type, offering allocators actionable benchmarking data on peer positioning.
Concurrent with questions about hedge fund valuations, AIMA released a September 2016 white paper investigating the contractual and structural mechanisms used to align hedge fund manager interests with investor interests. Based on responses from 120 institutional respondents collectively managing over $500 billion, the study examined fee structures, side pocket arrangements, gates, and other alignment tools—critical institutional concerns given performance volatility and fee compression in the sector.
Underlying broader skepticism, Cambridge Associates published "Is the Hedge Fund Heyday Behind Us?" in February 2016, directly challenging the historical case for hedge fund allocation. The analysis re-examined whether the industry's past risk-adjusted returns justified continued commitments amid rising costs, increased competition from passive alternatives, and structural market changes.
EDHEC-Risk Institute's factor investing research represented a parallel institutional preoccupation: whether hedge fund exposures could be systematically replicated through factor-based strategies. The 62-page paper analyzed optimal approaches to harvesting alternative long/short risk premia, addressing growing institutional interest in disaggregating hedge fund returns into replicable factor components rather than maintaining commitments to traditional hedge fund vehicles.
Willis Towers Watson's Global Alternatives Survey, released in July 2016, provided the most comprehensive market overview. The 99-page document examined allocation patterns across ten alternative asset classes—including hedge funds, private equity, infrastructure, real estate, illiquid credit, and insurance-linked securities—while identifying top managers within each category. The survey explicitly addressed how asset owner preferences diverged by institution type, offering allocators actionable benchmarking data on peer positioning.
Concurrent with questions about hedge fund valuations, AIMA released a September 2016 white paper investigating the contractual and structural mechanisms used to align hedge fund manager interests with investor interests. Based on responses from 120 institutional respondents collectively managing over $500 billion, the study examined fee structures, side pocket arrangements, gates, and other alignment tools—critical institutional concerns given performance volatility and fee compression in the sector.
Underlying broader skepticism, Cambridge Associates published "Is the Hedge Fund Heyday Behind Us?" in February 2016, directly challenging the historical case for hedge fund allocation. The analysis re-examined whether the industry's past risk-adjusted returns justified continued commitments amid rising costs, increased competition from passive alternatives, and structural market changes.
EDHEC-Risk Institute's factor investing research represented a parallel institutional preoccupation: whether hedge fund exposures could be systematically replicated through factor-based strategies. The 62-page paper analyzed optimal approaches to harvesting alternative long/short risk premia, addressing growing institutional interest in disaggregating hedge fund returns into replicable factor components rather than maintaining commitments to traditional hedge fund vehicles.
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