New research from Carne Group reveals fund managers expect strong growth in 2024.
Carne Group commissioned research with over 200 alternative asset, equity and fixed income fund managers in 10 countries that collectively manage USD1.6 trillion. Eighty-three per cent of managers surveyed expect the flow of new capital into their funds and segregated accounts to increase in 2024, with 8 per cent expecting significant growth.
Nearly three-quarters (73 per cent) of the fund managers surveyed expect that the number of new funds launching in their sector this year will be higher than in 2023 – 14 per cent expect a dramatic increase in the number of launches. Similarly, 62 per cent of fund managers surveyed expect the number of segregated accounts launched in 2024 to be higher than in 2023 (14 per cent expect it to be significantly higher).
Focus on asset classes
When the fund managers surveyed were asked to select the alternative asset classes they expect to see the biggest increase in fundraising in 2024, private equity was selected by most, followed by renewable energy and hedge funds.
Overall, 28 per cent of the fund managers interviewed expect the level of fundraising by private equity firms in 2024 to increase dramatically over the year when compared to 2023, and 50 per cent anticipate a slight rise. The corresponding figures for renewable energy are 30 per cent and 31 per cent, and for hedge funds they are 27 per cent and 29 per cent respectively.
John Donohoe, CEO at Carne Group says: “Alternative asset classes have benefited greatly from recent stock market volatility, which has resulted in a desire for investors to diversify their portfolios more. Some 82 per cent of the fund managers we surveyed expect market volatility to increase in 2024. This helps to explain why many alternative managers remain optimistic about attracting further capital as their asset classes can have less short-term valuation volatility.
“Respondents noted that fund managers face a complex regulatory environment with an increasing focus on corporate governance, issues around reporting, fees and expenses as well as operational costs. This means they need to place an even greater focus on improving their levels of efficiency, whilst maintaining the highest levels of transparency and reporting for investors.”
Move to external expertise
The research also found that 29 per cent of fund managers interviewed believe their organisation may switch to an alternative third-party service provider over the next year for one or more of the services they need. Managers value the flexibility and agility an outsourced provider can offer. As margins in the industry continue to come under pressure, cost saving and technology are also high on managers’ lists for outsourcing services.
Overall, 23 per cent of those surveyed expect a dramatic increase in the use of third-party management companies between now and 2026, with 56 per cent anticipating a slight rise here. The three main reasons for this identified by the research are the ability to launch different product sets, speed to market and ensuring that they can offer stronger fiduciary management of the fund.
John Donohoe CEO at Carne Group continues: “Fund managers are increasingly looking to rely on specialist third parties to provide a range of services for them – from regulatory compliance to specialist expertise in the launch of new products like ETFs and private asset funds.
“Our survey shows that the expertise of the investment team is the key selling point for asset managers. As complexity and cost pressures mount, managers will focus their efforts on investment management and distribution, and work with third-party providers to enable them to remain lean, agile and competitive.”
