NEW YORK--(BUSINESS WIRE)--Strong global franchises, broad scale and diversification of assets under management (AUM), management fee stability and low levels of debt relative to fee-related EBITDA are among the primary attributes that differentiate traditional, diversified alternative and hedge fund investment manager sub-sectors, according to a special report published today by Fitch Ratings.
The special report outlines Fitch's views on the relative strengths and constraints between traditional, diversified alternative and hedge fund investment management sub-sectors. Notable strengths include traditional investment managers' very low levels of gross cash flow leverage, diversified alternative investment managers' high levels of fee stability and hedge fund managers' ability to capitalize on increased investor appetite for uncorrelated hedge fund strategies despite recent underperformance.
In terms of sub-sector weaknesses, traditional investment managers' fees and AUM are more sensitive to changes in the market values of managed investments, diversified alternative investment managers typically have more explicit key man risk and assume more balance sheet risk and hedge fund managers typically exhibit lower product diversity.
The sector attributes outlined in Fitch's special report include investment managers' operating environment, company profile, management, risk appetite and financial profile, which correspond to the key rating drivers outlined in Fitch's 'Global Financial Institutions Rating Criteria,' dated Jan. 31, 2014.
The full report 'Investment Managers: Rating Attribute Analysis' is available at 'www.fitchratings.com' or by clicking on the link.
Additional information is available at 'www.fitchratings.com'.
Applicable Criteria and Related Research: Investment Managers: Rating Attribute Analysis (Comparing Traditional, Diversified Alternative and Hedge Fund Investment Managers)