| In-Depth Investor Interviews | |
| Jane Buchan Lawrence Kochard Daniel Stern | Amy Chen Eric Nierenberg Xiaoliang Zhao |
Hedge fund managers and their investors have had a long,complicated relationship. In the 1980s and ’90s, when hedge funds typically were measured in the millions of dollars and their investors were mostly wealthy individuals, the secretive industry was known for its large personalities and even larger returns. The balance of power favored the managers — as long as they delivered superior investment results.
The influx of pension plans and other big institutional investors during the 2000s changed the hedge fund landscape, bringing with them demands for transparency and accountability. Still, the scales continued to tip toward the managers. But with aggregate hedge fund performance lagging in recent years, and a handful of big-name institutions either cutting back on or bailing out of hedge funds altogether, managers have been feeling pressure from their investors.
To find out where the power resides today, we reached out to a half dozen of the world’s smartest hedge fund investors. Some, like Jane Buchan of PAAMCO and Daniel Stern of Reservoir Capital, have been around hedge funds since the 1980s. The others — Eric Nierenberg of Massachusetts PRIM, the Smithsonian Institution’s Amy Chen, Lawrence Kochard of the University of Virginia and CIC’s Xiaoliang Zhao — began investing in hedge funds more recently. They all agree that hedge funds have a place in institutional investors’ portfolios, but they have differing views on whether the balance of power has shifted.
