Hedge Funds Turn to Private Capital Playbook in Search of Assets

January 03, 2019

This article was first published by Bloomberg.

Hedge funds are trying on new stripes as the industry’s traditional investing style loses its luster.

Dan Sundheim likes private equity. Tom Wagner seeks a drawdown fund. Steve Cohen eyes venture capital.

“Hedge funds are increasing their breadth of offerings, such as adding venture funds, private credit and illiquid strategies with longer lockups,” said Joseph Gasparro, who helps hedge funds build capital as head of Americas capital services content at Credit Suisse Group AG. “By employing new offerings, firms diversify their product base and increase the stability of their assets.”

Even successful managers see the urgency to evolve in the face of market pressures from quants, indexers and President Trump. While the industry suffered outflows and dismal performance through the first 11 months of 2018, managers are following big investors into the booming world of private capital.