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Hedge Fund Standards Board ditches ‘hedge funds’ label

The Hedge Funds Standard Board has changed its name, distancing itself from the ‘hedge funds’ moniker, just three months after Financial News revealed it was debating the move.

The body, which works to boost standards of responsibility among members of the global hedge funds industry, will now be known as the Standards Board for Alternative Investments.

It said it a statement: “The new name reflects the evolution of the industry and the ongoing development of the SBAI as it enters its second decade.”

The hedge funds term has become increasingly contentious over the last 10 years and some of its biggest names have also sought to distance themselves from it. Now it is rare to find a large hedge fund that refers to itself as such in its communications to the market or investors.

Two of the biggest in London, Man Group and Winton Group, have instead opted for “active investment manager”, “alternative investment manager” and, in Winton’s case, “investment management and data science company”. Brevan Howard, once known as the biggest hedge fund in Europe, now calls itself an “absolute return manager”.

One London-based hedge fund manager, speaking to FN in June, compared the catch-all hedge funds label to junk bonds, which were rebranded as high-yield after the original name became associated with worthless and risky investments after market meltdowns.

Negative associations with the hedge funds term have grown in the last two years, as managers have struggled to justify high fees paying for under performance. Last year investors pulled a net $100bn from these funds, though net inflows nudged back into positive territory in the first half of this year.

Now the SBAI says the hedge funds label does not accurately describe its 200 members, which manage assets worth $3tn.

Luke Ellis, chief executive of Man Group and a trustee of the SBAI, said the alternatives industry had “evolved significantly” and managers have designed investment vehicles “to deliver many types of returns”.

“The new name reflects the SBAI keeping pace with this evolution,” he said.

Meanwhile a statement from the SBAI said its members “increasingly offer their investment strategies through a variety of vehicles beyond ‘hedge funds’”, which include liquid alternatives, regulated funds, co-investment vehicles, drawdown funds and managed accounts.

“At the same time, investors have moved away from the hedge fund term as they classify and integrate a diverse array of alternatives strategies by underlying asset class, return profile, market exposure or liquidity,” the statement said.

Dale West, senior managing director of the Teacher Retirement System of Texas and a trustee of the SBAI, said the standards communicated by the organisation “contain core principles that apply to all types of investment management activities, not just those organised by hedge funds”.

“The name change positions the SBAI to engage more broadly with investors, regulators and the industry to address emerging issues,” he added.

To contact the author of this story with feedback or news, email Tabby Kinder

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