DiligenceVault sponsored the annual GAIMOps Cayman conference last month. This 4 day conference gave way to multiple insightful conversations around best practices in data, tech, legal, compliance and operations in the alternative investment industry.
In this blog, we bring you the key takeaways from meeting with our asset allocator and asset manager clients at the conference, listening to panel discussions, and networking with attendees. While some themes are secular, others are new and emerging, and many are interconnected resulting in interesting cause-effect dynamics:
- Fund Structure Optimization: The continued growth of alternative investments and new fund structures is making everyone rethink optimal fund structures, even for established legacy funds.
- Changing Private Credit Dynamics: While private credit is on the rise, an abundance of dry powder tempers its attractiveness.
- Industry in Transition via M&A: Notably, BlackRock’s recent moves, such as the GIP deal, underscore the increasing M&A activity in the alternative investments space, particularly in infrastructure. We see this first hand as we track corporate actions and M&A at asset managers for seamless entity management on DiligenceVault for all allocators. We believe allocators should review due diligence considerations during this time of transition, and have penned an article on due diligence considerations during asset manager M&A.
- Demand for Product Development Professionals: The industry is witnessing a surge in demand for product development experts because of new and different fund structures, growth in retail interest in alternatives, expansion into other types of alternative assets including digital assets, and firm’s expanding their offering via M&A.
- Infrastructure Investment Challenges: Regulatory, tax, and legal complexities pose challenges in infrastructure investments despite their attractiveness. Many of the tailwinds and benefits of the infrastructure asset class – including income, diversification, privatization trends, and clean infrastructure have been attractive to larger investment firms to look to build or buy capabilities
- Rise of Digital Asset ETFs: Digital asset ETFs are gaining traction indicating increased investor confidence, but also pave the way for new risk and regulatory considerations.
- Valuation Concerns: Valuations, especially in digital assets ETFs and private equity, remain a top priority for many investors.
- Increased Utilization of 3rd Party Service Providers: Larger asset managers often engage multiple service providers as they look to outsource and scale multiple functions, as well as building redundancy with working with different firms for the same type of service across multiple funds, presenting challenges in managing and overseeing these relationships effectively.
- Digitization Theme: Interest in digitalization spans various areas, including legal and investor processes, reflecting a broader industry trend. Aspirations for Gen AI applications have also been a significant tailwind for digitalization and centralization.
- Evergreen Cybersecurity Challenges: The sophistication of the cyber attacks, outsourcing trends, increasingly digitized landscape add to the cybersecurity challenges. Our recent webinar on the topic of ODD for Multi-Asset Portfolios focused on the need for cyber resilience.
- Oversight of Service Providers: This has been a hot topic as the service provider relations grow in line with #8 – 10 above. Regulators across the world are also signaling the importance of third party and forth party due diligence via their risk alerts, guidance and rule making.
- Globalization Risks: While investing globally presents opportunities, it also comes with inherent risks, particularly in managing globally distributed teams.
- The Activist SEC: Some asset managers noted about the SEC’s inquisitive approach, emphasizing the importance of ongoing dialogue and transparency as key.
Networking with industry peers, sharing of viewpoints and experiences with peer investors and service providers is a great way to stay informed as asset managers and allocators navigate the complexities of investment management oversight as well as new business strategy considerations.
You may be interested in two recent conference takeaways from Team DiligenceVault:
- ODD for Alternative Investments – Five Takeaways from The MFA Ops Conference 2024
- Key Insights from PEI Investor Relations, Marketing and Communications Forum 2024
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