There is some evidence to suggest that this is being redeployed into illiquid alternatives, such as private debt, private equity and real estate. These can offer some degree of illiquidity premium in the form of yield pickup, but investors could be locking themselves into relatively moderate return profiles and missing out on the optionality of capitalising on any dislocations in liquid assets.

Hedge fund managers are tackling asset raising from multiple angles. Diversifying vehicle structures to include managed accounts, funds-of-one, UCITS, ’40 Act funds and co-investments can help to diversify the investor base, though any potential conflicts of interest between vehicles need to be disclosed, managed and mitigated. Bespoke fee offerings may be needed to garner some investors. Customised risk aggregation and reporting may also be required. ESG may also need to be customised to investor preferences. Capital introduction services may be complemented by specialist third party marketers who may focus on certain regions or investor segments.

The marketing and IR role is also now a multi-faceted function, which includes asset raising, asset retention, communication, relationship management and branding. All of this is becoming more labour intensive: the hit rate from investor meetings seems to have dropped markedly over the past few years. But marketing teams are not solely assessed on assets raised. They can also be appraised using Key Performance Indicators (KPIs) such as numbers of meetings, cross-selling, relationship strength and corporate citizenship. Skilled salespeople need a feel for how and where a strategy could fit into clients’ overall portfolios. Product specialists may sit in the same room as portfolio managers and develop an intimate knowledge of investment strategies. Clearly, the bar is rising as the industry matures.

Equities and bonds cannot go on advancing indefinitely, and if inflation reappears combined with interest rate rises, it is possible that both asset classes could lose money in absolute terms. The diversification benefit of genuinely uncorrelated strategies is appreciated by the biggest pension funds and endowments, and should become more widely fashionable when conventional assets start to falter.