Survey: How Top Hedge Funds Survived the Financial Crisis - and What They Expect for the Future of Hedge Fund Regulation

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Ernst & Young report captures the outlook of the world's top hedge fund managers as they look to a future framed by increased hedge fund regulation

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They are braced for further shifts but they also believe change should be driven by investors.

Having already been profoundly affected by the financial crisis, hedge fund leaders see further changes on the horizon, according to Ernst & Young's annual survey of senior executives at 100 of the largest global hedge funds.

"It was clear from our interviews that hedge fund managers reacted swiftly and dramatically to the credit crisis," said Arthur Tully, co-leader of Ernst & Young's Global Hedge Funds practice. "They are braced for further shifts but they also believe change should be driven by investors."

Leaders of the 100 hedge funds interviewed manage some US$680 billion of equity, roughly half the industry. During the interviews, they discussed everything from increased hedge fund regulation to industry convergence.

Here are the top six themes that emerged:

1.    Fund structures have reacted sharply to the crisis
2.    Significant changes have been made to fees and fee structures
3.    Investors are more focused on risk
4.    Managers are getting their arms around hedge fund regulations
5.    Views are polarized on use of third-party administrators and valuation agents
6.    The endgame is not yet in sight

Learn more about the survey findings from the leaders of Ernst & Young's global hedge fund practice.

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Ernst & Young refers to the global organization of member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young LLP is a client-serving member firm of Ernst & Young Global Limited located in the U.S.

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