Investors Tune In to Performance Metrics As Growth in Asset Under Management Sputters

In recent times, there’s been a discernible shift in investor behaviour. As growth in assets under management (AUM) begins to slow, Limited Partners (LPs) are finding it increasingly crucial to focus on performance-based returns. The old adage, ‘it’s not how much you have, it’s how well you use it’ seems particularly pertinent in this context.

LPs are major players in the investment world, often backing hedge funds, private equity funds, and other asset management platforms. Traditionally, the size of a portfolio under management was viewed as a reliable indicator of a fund’s potential. However, as the AUM growth rate starts to splutter, the emphasis is shifting towards the fund’s ability to generate strong returns - performance is increasingly becoming the metric of choice for discerning investors.

As this trend continues, there may be significant implications for the asset management industry. Performance-based investing may reshape how funds attract capital and could potentially influence how investment products are designed and marketed in the future. This is an emerging narrative requiring careful attention moving forward.