HFM Operational Leaders Summit 2022: Three key takeaways

The HFM Operational Leaders Summit has been running for over 15 years, focusing primarily on the C-suites of hedge funds.

The event is renowned for the detailed industry dialogue, exploring the key themes, insights and main issues facing the industry from the market practitioners. Jon Masters, Head of Business Development at INDOS Financial, explains his three key takeaways from the event:

 

Challenges as opportunities

It may seem straight off the motivational speaking playbook but there was definitely a sense that, if handled correctly and communicated in a transparent manner, the difficulties in the market currently could provide ample chances to rebound.

In particular, managers with negative performance in the current environment would benefit if their strategy remains consistent. Investors should see the current economic situation as an opportunity, particularly if portfolios appear discounted.

The key to using challenges in your favour is building strong, open relationships with LPs and continuing an ongoing dialogue with them so they are aware of the situation. The Summit also saw a reiteration of the belief that funds benefit most from quality LPs during tough market conditions.”

 

Cloud is key

Things move so fast when it comes to technology, often there is a wide disparity among the adopters and laggards. Cloud-based infrastructure is by no means new but it was clear from this year’s event that it is the prevalent technology across all managers with only large banks retaining a server base. This makes managers more agile and reduces infrastructure expenses.

A particularly interesting view was that technology should not be adopted for the sake of it, it should be the enabler rather than dictating the requirement/direction for a company or process.

It was also stressed that managers are ultimately still responsible for technology and take extra care in selecting solutions even if outsourced. This is particularly true when it comes to regulatory reporting.

 

ESG

No event passes at the moment without some reference to ESG and this was again the case at the Operational Leaders Summit.

The general consensus was that hedge funds have so far been passive, with a “wait and see” approach unless the strategy is core ESG. In some cases, this has been implemented to the extent that may even become un-investible. Arguably this is a better approach than greenwashing, which continues to be an issue but the sector is still battling with its approach.

One other talking point was the un-intended consequences of misaligned capital. In particular, where “bad” companies, such as those tied to heavy carbon-based industries, were actually on a journey of improvement. In this case it was felt that better value created through engagement rather than not.

 

The event also covered regulatory aspects, cryptocurrency, family offices, hybrid structures, risk management, legal issues, and digital assets. If you would like to discuss any of these topics further, please get in touch with Jon directly.

HFM European Operational Leaders Summit