The success of the hedge fund industry has been phenomenal over the past 30 years, but what about the next-generation managers? As the industry institutionalises, the institutional buyers are asking for many of the business processes they rely on in the long-only world to be adapted to the hedge fund world. A long-term pension fund investor is unlikely to invest in a manager that has no succession plan; key-man cover; and organisational basics in place.
Due to the time it takes to find and source a manager, investors like to stay with their investments for as long as the performance holds up....