Fundamental - Issue 11

We are excited to share the latest edition of Fundamental, the HW Funds team’s quarterly publication, where we unpack the trends, challenges and opportunities shaping the future of the investment funds industry.

For many fund managers, navigating regulatory change and enforcement remains a focus. Regulatory surveillance of private markets is ongoing, and other industry stakeholders are taking a stronger approach to gatekeeping and enforcement of governance requirements.  We are seeing an increasing demand for independent trustees and responsible entities, with many managers looking to restructure existing arrangements to meet distributor expectations – platforms, wealth groups and distributors have enhanced their due diligence and onboarding requirements. HW Funds has been closely involved with several leading industry bodies as they develop industry standards for funds investing in private markets.  While the standards will be a significant change for a lot of managers requiring structural and governance uplifts, there has been a positive response from stakeholders who are supportive of a greater level of consistency in governance and disclosures across the industry.  

Market activity has started to adjust to the higher interest rate environment, factoring in the baseline stabilising at a higher level, while also pricing-in some volatility. Real estate has been a notable exception given the significant impact of rates on yield, with caution still coming through in acquisitions by property funds, but assets with strong fundamentals or specialised offerings resulting in successful capital raisings. Across private equity assets the valuation gap between buyers and sellers is starting to close. While there is still a heightened awareness of risk allocation by buyers, which is continuing to flow through to longer due diligence periods and drawn out liability negotiations, there are few transactions falling over on price alone.

We hope you find this edition of Fundamental insightful and thought-provoking. If you would like to discuss any of the issues raised or their potential impact on your business, please contact a member of the HW Funds team.