Partnerships between hedge funds and their investors are increasingly common, according to a new survey by the Alternative Investment Management Association (Aima) and Barclays.

The survey, called The Extra Mile: Partnerships between Hedge Funds and Investors, found that investors were increasingly setting up partnerships with hedge funds. More than two-thirds of investors and three-quarters of managers said they had entered into partnerships.

Jack Inglis, Aima’s CEO, said the results were “encouraging” and added: These arrangements represent a win-win for both sides, with significant benefits for both the manager and the investor. What the survey shows is that managers are truly going ‘the extra mile’ in terms of sharing knowledge and resources and providing customised products and services to their investor partners.

"These partnerships are also providing further evidence of very high levels of satisfaction among investors in their hedge fund investments.”

The survey found that partnerships varied in form and identified the five main elements as access to expertise and resources, customised products and solutions, co-investment, product seeding, and equity stakes.

There was no clear bias towards size as the survey found that both larger and smaller managers and hedge funds of all strategies were found to have striking partnerships.

“The publication of this paper comes at an important time in the evolution of the hedge fund industry. Amidst the on-going process of institutionalisation, investors are actively pursuing a more direct engagement with the underlying hedge funds in which they are invested,” said Michelle McGregor-Smith, the chief executive of British Airways Pension Investment Management and the chair of Aima’s Investor Steering Committee, which helped to direct the survey.

Partnerships offer investors several benefits such as improved knowledge and understanding, better alignment of interest with managers and better value for money, while managers receive more loyal investors, support for new product development, cross-selling opportunities as well as the offer of investor references.

Lou Molinari, MD and global head of capital solutions at Barclays, called the growth of partnerships an “exciting new direction” for the hedge fund industry.

“Successfully building partnerships with investors can allow managers to grow their business whilst increasing the stability of their assets under management, and cater to the specific needs of an increasingly-sophisticated investor base.

“Managers who are interested in pursuing partnerships should put in place a strategy to do so, identifying those investors they want to partner with, and deciding which of the elements of partnership they are best-placed to deliver.”