Private Equity Inflows vs Hedge Fund Inflows

Private Equity Inflows vs Hedge Fund Inflows

Mountains-1024x683 Private Equity Inflows vs Hedge Fund Inflows

BlogKMC-copy Private Equity Inflows vs Hedge Fund Inflows

Article written by Ken Carmody.

A recent survey conducted by Ernst & Young (EY) reveals that Hedge Fund inflows are now on par with Private Equity (PE) inflows. The last few years have seen allocations to hedge funds dramatically reduce comparatively to venture capital (VC) or private equity investment inflows. This is mainly due to the underperformance of hedge funds in recent years. However, since the sell off in March/April 2020 we have witnessed outperformance in hedge funds.

The trend had indicated further reallocation from hedge funds with Investors allocating 40% of their portfolios to hedge funds in 2018, reducing to 33% in 2019 and 23% in 2020. Conversely, 2021 has seen a change in trend with investors allocating 28% of their portfolios to the asset class.

How does this compare with PE inflows?

With hedge fund inflows we saw a downturn in allocations met with a very recent resurgence. However, PE and VC inflows have remained steady in their rise higher. Investors allocated 18% of their portfolios to private equity or venture capital in 2018, followed by 26% in 2019 and 2020 and 27% this year, this being on par with the hedge fund allocations at 28%. The next closest allocation is that of real estate but this asset class has seen a downturn in 2021. Investors distributed 20% of their portfolio in real estate in 2018, followed by 23% in 2019 and 26% in 2020. Allocations for real estate in 2021 stand at 24% of investors portfolios.

Interestingly, hedge funds have been boosting their exposure to PE and VC led by investors increased comfort level for this type of risk. The EY survey found that 21% of hedge fund managers increased their exposure to PE and VC within the last two to four years.



Carbon accountability for Professional Services

Carbon accountability for Professional Services

kelp_forest1080-1024x683 Carbon accountability for Professional Services

Kelp forests like a recently protected site off the Sussex coast sequester 35x more carbon than a rainforest by area.

 Article written by Tim Montagu.

A stroll through Covent Garden a few weeks ago was disrupted by an Extinction Rebellion protest which has turned attention to law firms and financial services.  Their reasoning is that the city of London is the ‘arch financier of the carbon economy supporting 15% of global carbon emissions’.  Whilst the rationale for 15% could be debated, it is clear that as a global financial centre, UK regulators and companies should all be striving to influence a low carbon future both in their own operations but more importantly, for their clients regardless of location.

Most professional services firms now have an ESG policy statement a click or two away from the front page of their website.  These highlight the carbon emissions from their own buildings, energy supply and people.  Accounting for the emissions of clients in receipt of professional advice is rare, whereas banks or investment funds accounting for a % of emissions proportionate to the financing they provide is much clearer cut and becoming expected in the market.  Green finance products that offer a few basis points off the price of already cheap debt for clients hitting self-generated targets is insufficient compared to their carbon impact or the scale of the challenge reduce emissions.

Law Students for Climate Accountability is a US action group that claim ‘top law firms conduct 5-10X more work to exacerbate climate change than mitigate it’.  They scored the top 100 US law firms on the three areas where lawyers typically engage with the fossil fuel industry – lobbying, financial transactions and litigation to prevent (or support) climate accountability.  This kind of scrutiny is much needed and will surely follow for UK firms who should be cautious on how they represent carbon and resource intensive companies.

  The obvious defence here is that it is better to be a professional advisor guiding the client towards a greener net-zero future, than it is to allow a deal to proceed with a less environmentally minded competitor.  The same logic applies for UK arms sales to other nations; in theory we have a say in how weapons are used.  Unfortunately, this logic only holds if the supplier has a clear, consistent and publicly accountable policy containing sufficient carrots and sticks to guide the client to more virtuous behaviour. 

Lawyers, accountants and consultants have a key part to play in enabling companies to be more sustainable, these include;

  • helping clients identify, track and report on carbon emissions now required by regulators and initiatives like the Task Force on Climate-Related Financial Disclosures (TCFD)
  • assisting with climate risk stress testing mandated by regulators
  • supporting compliance with environmental regulation
  • developing policies and procedures for assessing climate risks to workforce, assets, operations and transactions.
  • helping identify new commercial ventures enabled by the demands of a more environmentally conscious client.

Progress towards all firms tracking and disclosing their carbon emissions is gathering pace.  Over half of UK top 100 law firms for example have signed up to the Legal Sustainability Alliance, adhere to ISO 14001 environmental management regulations and have ‘science-based targets’ (SBTi) in order to be net zero[1] or the less stringent carbon neutral[2] by 2025 or 2030.  Smaller firms typically have more ambitious and imminent targets in light of their smaller office footprint.  Finding a law firm openly stating it will be selective on clients based on their environmental credentials is a challenge.

CAT_2021.05_2100WarmingProjectionsGraph.original-1024x477 Carbon accountability for Professional Services

The scale of the challenge to limit global warming is stark. Covid caused 2020 emissions to drop 5.6% or 1.9 Gt CO2. However strong recovery in 2021 shows emissions likely back to 2019 levels in 2023.

For audit and advisory firms, it is easy to envisage the carbon credit market becoming as complex and profitable as financial accounting is currently.  Carbon offsetters will need their tree plantations, kelp forests or other sequestration sites monitored.  This will create rural employment financed by big corporations assisting the much-needed economic rebalance.  No doubt there will be audit scandals where carbon off-setters start double charging for their credits but at least the ‘corporate carbon’ link is being forged. 

In any event, the scale of change needed to reach net-zero or carbon negative[3] requires advisors and financiers to be bold and environmentally principled.  If a policy is clear and consistent, a small number of missed opportunities will likely be far outweighed by new sales to clients identifying with a firm’s environmental vision and purpose. 

Finscoms is able to conduct research, create and implement environmental policies and web content for professional services firms wishing to be progressive on sustainability. 

Thank you for reading, do get in touch.


[1] Net Zero:  Company reduces emissions across all activities as much as possible and then offsets any emissions they do produce.  This is more stringent than neutrality alone.

[2] Carbon Neutral:  Any carbon released to the atmosphere is balanced by the same amount removed by buying carbon credits or offsetting by schemes like reforesting or kelp seeding.  Neutrality does not commit a company to reducing its emissions, they just have to pay to offset them.

[3] Carbon negative:  The most ambitious commitment by removing more carbon than the firm produces, therefore actively helping the planet.  This is also called carbon positive and was in 2020, pledged by Microsoft by 2030. 


Distressed Debt Funds Continued Gains

Distressed Debt Funds Continued Gains

Charts Distressed Debt Funds Continued Gains

BlogKMC-copy Distressed Debt Funds Continued Gains

Article written by Ken Carmody.

Eurekahedge reports that Distressed Debt Funds made their tenth consecutive month of gains in July. Returns for the year to date are marked at 11.5%, such returns for this niche have not been seen since 2009.

These type of funds generally make short-term plays on near-default or defaulted bonds, make emergency loans, and in some cases takeover delinquent borrowers via the courts. This strategy has quickly come to fruition due to the rapid market recovery catalysed by government spending and assertive central bank manoeuvres and stimuli along with swift vaccination programmes.

Debt Distressed Debt Funds Continued Gains

Several distressed debt hedge funds have garnered returns of up to 26.2 per cent in the year up to the end of May. These returns have of course been sustained by a significant rally across corporate debt markets. This has resulted in lowered borrowing costs which have been crucial in helping cruise lines, hotel groups, air carriers, and others raise billions of dollars to keep themselves afloat.

As we reach the third quarter of 2021 there are investors looking beyond debt for returns for example UBS’s hedge fund investment unit have recently trimmed its exposure to distressed debt. Also, Preqin recently reported that some investors have “cooled their interest in distressed debt and special situations compared to last year as opportunities proved harder to come by than expected”.

Regardless, plenty of distressed debt specialists raise and deploy money consistently in any cycle, and assert that there will be adequate opportunities due to aftershocks created by the pandemic.



Finscoms adds to its Executive Management Team

Finscoms adds to its Executive Management Team

Tim-Montagu1080-1024x639 Finscoms adds to its Executive Management Team

Finscoms are delighted to welcome Tim Montagu aboard our executive management team. Tim most recently worked for HSBC in their structured finance department, covering professional services clients and those from any sector suited to private equity backed leverage.

“Tim is a natural fit to our clients in their route to the investor, the sourcing of projects and for those requiring assistance with their marketing and communications strategies. We are all excited to work with Tim developing our ESG service line for the benefit of all”   Edward Simpson, co-managing partner 

“I am pleased to join Finscoms who have a clear proposition to assist businesses and investors in finding synergies and communicating their brand.  Financial services often work in silos defined by their investment parameters and risk appetite.  Working across the industry with a strong network and project selection process, gives Finscoms clients a great chance at a successful match and funding.”   Tim Montagu

Tim will have responsibility for Finscoms and our service lines in London and the UK, including a focus on ESG solutions for professional services firms who wish to demonstrate greater impact and keep pace with the sustainability agenda.

If you would like to contact Tim please email

Finscoms Named Best Financial Marketing & Communications Firm

Finscoms Named Best Financial Marketing & Communications Firm

AIaward-copy-1024x652 Finscoms Named Best Financial Marketing & Communications Firm

Acquisition International today named Finscoms ‘Best Financial Marketing & Communications Firm – the Republic of Ireland’.

Acquisition International, is an international, monthly digital business magazine committed to bringing its readers up to the minute news, comment and analysis. Acquisition International magazine launched in 2010, is circulated to in-excess of 108,000 professionals, including Top Tier Managers, Investment Professionals, Business Advisers and Service Providers.

Finscoms was chosen ahead of 5 other nominees in the category most notably for its dynamic strategy shift in response to a new playing field created by the global pandemic. Finscoms was able to increase exposure to its clients making the very most of the abundance of digital pathways created worldwide.