Business experts have been struggling to find organizational responses to the effects of COVID-19. Business analysts are struggling as well with finding indicators of positive future trends. Luckily, hedge funds and private equity firms are poised to shake off the negative effects of the pandemic.
Hedge funds are expected to come out of 2020 as more robust, flexible, varied, proficient and prolific. This is according to the findings of the latest study carried out by KPMG international in association with the Alternative Investment Management Association (AIMA).
The study surveyed 144 hedge fund managers around the globe. These managers constitute an aggregate total of $840 billion USD in assets under management (AUM). The study was conducted while the economic fallout from the pandemic was in full force.
This development for hedge funds is particularly noteworthy because most of the business world is struggling with the adverse economic effects of the pandemic. The KPMG-AIMA research active hiring and increased digitization as the primary driving factors
According to the KPMG-AIMA investigation, 57% of hedge funds throughout the world were hiring talent or looking to increase hiring activity during COVID-19. 81% of the surveyed firms were investing in digital infrastructure.
The KPMG-AIMA study attributed the successful performance of hedge funds and PE firms to the following reasons:
1. Acquiring and Keeping talent – Tactical hiring by hedge funds and PE firms has allowed managers to locate fresh talent with a high lifetime value. This has been made possible due to the decentralized nature of operations. 57% of the managers surveyed reported that they were either hiring or on the lookout for new talents since the onset of COVID-19.
2. Accepting Change – COVID-19 lockdown measures have emptied workplaces and offices, and as a result, remote work is defining new eligibility standards for business continuity. Understanding and adjusting to maintain employee safety and health has worked magnificently for hedge funds and firms. 61% of hedge funds felt that flexibility from upper level management had a positive effect on their employees’ work.
3. Implementing Technology – Remote work has had quite a novel effect on hedge funds and private equity firms’ business strategy. Funds have warmed up to the concept of efficient and affordable productivity supported by technological solutions. Productivity and cost-effectiveness do not have to be mutually exclusive. Cloud-based software platforms have provided the ideal solution for firms looking to better manage their expenses and increase savings.Digital tools such as Resolvr are increasing hedge fund and private equity firm revenue by using digital transformation to optimizethe expense allocation process. This type of software solution can also streamline communication between vendors and team members, and optimize operations by eradicating the need for human-manual processes. In fact, 71% of the firms surveyed in the KPMG-AIMA study have credited innovative software solutions for titling the scales in favour of growth.
4. Renovating IT Infrastructure – 80% of the surveyed funds are investing to renovate their information technology infrastructure. Half of these firms are strengthening their cyber security shields. Approximately one out of every three funds are looking to establish a centrally accessible data for analytics. Both tech investments can increase the efficiency of remote work.
5. Changing Office Spaces – COVID-19 has made it imperative for firms to take maximum health and safety measures prior to the reintroduction of office life to employees. 64% of hedge funds are planning for radical transformations of their offices to accommodate COVID-19 requirements. 44% of firms will be implementing employee training for health and safety protocols. 42% of firms are also formulating plans to aid employees who may not be able to come into work.
6. Facilitating Investor Interactions – 58% of funds and firms are in agreement that virtual communication with investors is conducive to growth. Video conferencing technology has ensured that frequent, seamless virtual meetings between investors and hedge fund managers are easily manageable.
7. Powering Efficiency With Technology – Despite the unparalleled economic constraints that firms are facing, most are seeking to increase investment in one area: technology. This is with the goal of improving the overall efficiency of the firm without sacrificing cost effectiveness.
8. Planning for the Future – COVID-19 has shown funds and firms that their business models need to be fine-tuned in order to withstand future economic challenges. The transformation of outdated business models can be the first steps towards securing a stable, profitable future.
Andrew Weir, Global Head of Asset Management at KPMG, voiced the sentiment shared by virtually all hedge funds and private equity firms:
“The hedge fund industry has been innovative, agile, and resilient through the pandemic, and our survey bears this out. Our research shows that a good number of hedge funds see this as a time to attract new talent to their firm. This environment has created new opportunities for hedge funds; catalyzing industry actors to adapt to a new reality. Investment in smart sourcing and enabling hybrid working practices will not only improve efficiency but also prioritizes employee well-being. Ultimately this should benefit an industry that will emerge stronger and more diverse to sustain its future growth.”
Hedge funds and private equity firms have been quick to realize that even in the economic turmoil caused by COVID-19, there is an opportunity for business growth. This growth can be realized through the implementation of software solutions that support remote work and rapid changes. By increasing the presence of technology in their business models, hedge funds and private equity firms can fare well against modern-day business complexities.
If expense allocation software (or spend management software) could help your hedge fund or private equity firm, get in touch with us to learn more about what we offer. We can set up demonstrations, trials and complimentary consultations to see if Resolvr fits your fund's requirements, with no strings attached.