BNY Mellon's Pershing Unit Releases New Independent Study Focusing on the Evolving Competitive Landscape for Hedge Funds

BNY Mellon's Pershing Unit Releases New Independent Study Focusing on the
Evolving Competitive Landscape for Hedge Funds

JERSEY CITY, N.J., Nov. 9 /PRNewswire-FirstCall/ -- Pershing LLC, a BNY Mellon
company, and Finadium LLC, have published a new independent study that
examines the continued emergence of investment managers in the equity long and
short marketplace and their convergence with hedge funds.

The report entitled, Competition and Convergence: The Evolving Landscape for
Hedge Funds is available through Pershing Prime Services and BNY Mellon
Alternative Investment Services. The study indicates that while investment
managers have relatively few assets in equity long and short investment
portfolios, this segment of the market continues to grow rapidly as firms seek
to diversify their business lines and compete with hedge funds. This new
competition for assets has pushed some hedge funds into long-only investment
strategies and others towards retail distribution. The report suggests that
investment managers will become more important to hedge funds as potential
partners in product offerings and mergers and acquisitions. Key findings from
the study include:

-- Growth of Equity Long and Short Investment Strategies Among Investment
Managers Expected to Increase - Investment managers' control of equity
long and short investment portfolios is expected to rise from $204
billion to $345 billion by 2012 representing an increase from 19% to
28%
of today's $694 billion marketplace. According to a recent Finadium
survey, 65% of investment managers now operate some sort of long and
short fund, up from 33% one year ago. Independent hedge funds are
also
expected to continue to grow and increase their equity long and short
portfolios to $810 billion by 2012 as equity markets recover;
-- Potential Regulatory Reform Remains a Wild Card - Investment managers
view potential regulatory reform as a wild card in driving convergence
between themselves and hedge funds. The report indicates that some
investment managers advocate working more closely with hedge funds as
sub-advisors and potential acquisition targets with the expectation
that
increased regulation will occur. Without specific regulation, hedge
funds will continue to have few legal obligations to disclose fees and
practices;
-- Hedge Funds Continue to Benefit from Strong Prime Brokerage
Relationships - Investment managers have notably different servicing
needs than their hedge fund competitors. These organizational
requirements have created challenges for investment managers looking
to
do business with noncustodian prime brokers, to the benefit of hedge
funds with strong prime brokerage relationships. While investment
managers are becoming more agile in their technology and operations,
no
party has surmounted the funding obstacles that regulatory and market
pressures have put in place; and

-- Tri-Party Custodial Relationships May Offer Hedge Funds an Edge -
Hedge
funds have a wide range of opportunities and challenges to take into
consideration when evaluating the strategies of investment managers in
the long and short arena. For example, hedge funds should consider
tri-party custodial relationships which bring many traits of the asset
management industry into their domain. These arrangements allow hedge
funds to mitigate their counterparty risk by custodying cash and fully
paid for securities with a less leveraged bank custodian, while prime
brokerages still hold the fund's short positions and provide margin
financing.

Craig Messinger, managing director of Pershing Prime Services, said, "As
investment managers increasingly expand into the equity long and short
marketplace, hedge fund managers need to provide their investors with a
distinct value proposition that uniquely positions them in the marketplace.
Exploring new investment strategies, embracing potential merger and
acquisition opportunities and offering clients innovative separately managed
account solutions are several tactics hedge funds should consider to help
continue growing their businesses."

Josh Galper, managing principal of Finadium LLC, said, "The growth of long and
short mutual funds provides hedge fund managers with an exceptional
opportunity to reach a new investor base with a relatively easy-to-understand,
high-value offering. We expect long and short mutual funds to be an important
asset gathering investment solution that will continue to help investors and
fund managers achieve their financial objectives."

Pershing Prime Services delivers an unconflicted, comprehensive suite of
global prime brokerage solutions, including extensive access to securities
lending, dedicated client service, robust technology and reporting tools,
worldwide execution and order management capabilities, a broad array of cash
management products and the integrated platform of BNY Mellon. Pershing Prime
Services is a service of Pershing LLC. A copy of Pershing's new whitepaper
and additional information about Pershing Prime Services' capabilities and
solutions can be found by visiting www.pershingprimeservices.com.

Pershing's parent company, BNY Mellon, also provides a wide range of
administration services to hedge funds, funds of hedge funds and private
equity assets through BNY Mellon Alternative Investment Services, one of the
world's leading providers in this market segment with more than $200 billion
in hedge fund assets under administration. In addition to hedge fund
administration, BNY Mellon offers a wide range of accounting, cash management,
collateral management, custody, asset management and wealth management
services to the hedge fund industry.

Pershing LLC (member FINRA/NYSE/SIPC) is a leading global provider of
financial business solutions to more than 1,150 institutional and retail
financial organizations and independent registered investment advisors who
collectively represent approximately five million active investors. Located
in 20 offices worldwide, Pershing and its affiliates are committed to
delivering dependable operational support, robust trading services, flexible
technology, an expansive array of investment solutions, practice management
support and service excellence. Pershing is a member of every major U.S.
securities exchange and its international affiliates are members of the
Deutsche Borse, the Irish Stock Exchange and the London Stock Exchange.
Pershing LLC is BNY Mellon company. Additional information is available at
www.pershing.com.

BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation
(NYSE: BK). BNY Mellon is a global financial services company focused on
helping clients manage and service their financial assets, operating in 34
countries and serving more than 100 markets. BNY Mellon is a leading provider
of financial services for institutions, corporations and high-net-worth
individuals, providing superior asset management and wealth management, asset
servicing, issuer services, clearing services and treasury services through a
worldwide client-focused team. It has $22.1 trillion in assets under custody
and administration and $966 billion in assets under management, services $11.9
trillion in outstanding debt and processes global payments averaging $1.6
trillion per day. Additional information is available at www.bnymellon.com.

SOURCE Pershing LLC

Barbara Gallo, + 1-201-413-2930, bgallo@pershing.com