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A few years ago, as the chief risk officer at an Asian alternative investments firm, Scott Treloar found himself in an unexpected situation.The company, which had been managing over US$5 billion, was trying to raise capital for hedge funds. Treloar thought it would be a breeze.Much to his surprise, no one was interested – and they failed to raise any money.Investors said they weren’t keen on hedge funds, as those had been performing poorly for the past decade. In 2019, fund managers underperformed in the S&P 500 Index – a commonly used benchmark – for the ninth consecutive year.

The traditional hedge fund model is no longer working. Performance is poor. Costs are high. Alignment is low. It needs to change. The three forces driving this need for change are:Increasing costs as regulators and investors demand higher operational standardsPressure on fees as investors are become more sophisticated and expect more for lessGreater competition making the markets more efficient and fragmenting available alph.