Bermuda’s growing asset management industry has a great opportunity for further expansion — particularly in the areas of insurance-linked securities and private equity.

That was the one of the takes from the EY Hedge Fund Symposium that took place in Bermuda earlier this month, attracting around 175 financial-services professionals.

Jessel Mendes, a Bermuda-based EY partner and regional growth markets leader, said that growth was already happening with the promise of more to come.

Mr Mendes said in an interview yesterday: “We are definitely seeing an uptick in the asset-management space. The three pillars of the industry are fund incorporations, administration and asset managers and we’ve seen an uptick in all three.”

Fund launches in Bermuda were up 10 per cent on last year, Mr Mendes said, with ILS and private-equity funds a particular focus.

“Some big asset managers in New York, Boston and London are looking at Bermuda for their funds,” he added, declining to add details for confidentiality reasons.

Bermuda has already attracted some of the world’s major fund service-providers, including Mitsubishi UFJ Fund Services, SS&C Technologies, Apex Fund Services and Centaur Fund Services, which set up an office on Pitts Bay Road in July this year.

Mr Mendes said: “The Bermuda Monetary Authority lists 57 asset managers and another 22 in the ILS space and there are many others in the private-equity space who are not regulated.”

The new law firms that have entered the Bermuda market in recent years had brought global relationships that had further boosted business, he added.

Conferences such as the Global Fund Forum, staged for the fourth time this year, and the World Alternative Investment Summit, held for the first time in September, were also adding to the asset management industry momentum.

The BMA reported in its second-quarter Regulatory Update that there were 592 funds based in Bermuda with a net asset value of $151.81 billion as of June 30 this year.

Jeff Short, a Cayman-based EY partner and wealth and asset management sector leader, also attended the hedge fund symposium, staged in Bermuda for the tenth time.

“We had a panel focused on ILS and private equity space where we see a tremendous opportunity for Bermuda,” Mr Short said. The mood had been “very bullish on Bermuda”, he added.

According to a report by analysts at Goldman Sachs, the hedge-fund industry is on course to underperform the returns of the S&P 500 for an eighth year. Mr Short said there was much more to the story.

For example, assets managed by the industry were around $3 trillion — an all-time high — while from a performance perspective, hedge funds had delivered positive returns for the past several months.

Managers were coming under increasing fee pressure from investors, Mr Short said, while fund managers were listening harder to their investors and tailoring specialised alternative-investment products to their needs.

He referred to the EY 2016 Global Hedge Fund and Investor Survey, which provided more insight into how the industry is changing.

The survey found that hedge fund growth has slowed for a variety of reasons — the abundance of low-fee passive investment options, lacklustre hedge fund performance and cost concerns.

Other findings include:

• Hedge fund managers and investors alike see changing investor preferences as a risk to the hedge fund industry.

• Almost half of investors expect their hedge fund investments to shift from traditional hedge funds to other alternative products over the next three to five years.

• Innovation is serving as a differentiator; nearly 50 per cent of managers utilise next generational data and/or artificial intelligence as part of their investment programme.

• Hedge fund managers are feeling the pressure from changing investor demands and the managers that adapt accordingly and timely will be the most successful in achieving growth.