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risk tolerance and declining costs drove
total hedge funds industry capital to a
record $3.16 trillion in Q3 2017.
“The hedge fund industry itself has
ebbed and flowed in terms of its role in
the investing business. They were once
the shiny new thing and now they are
more common place. In between, there
“Starting up with a new prime
broker takes time and energy,
so you want to make sure if
you are going to do it, it will
be a long-term relationship.”
have been some years that have been dif-
ficult on returns and others when they’ve
been popular investment vehicles,”
explains Aldoroty.
While launches, strategies and popular-
ity of hedge funds have varied throughout
the years, Aldoroty pinpoints technol-
ogy as one of the biggest factors in the
transformation of the industry during his
career.
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Global Custodian
A L D O R O T Y ]
“If you go back over the timeline of my
career, technology has been the biggest
change,” he says. “I think of Wall Street as
a technology business. While it’s not the
only thing to determine success, having
the best technology certainly helps.
“The nature of the work has changed
over the years as things have become
more automated. Hedge funds and mutual
fund clients have become automated and
we’ve kept up with that.”
One for the future
I ask the new GC Hall of Famer what
changes he would like to see in the indus-
try in the coming years and it doesn’t take
him long to highlight how hedge funds
could reach a broader investor base.
“If you buy a mutual fund or 40 Act
fund, the vast majority are long-only vehi-
cles,” Aldoroty highlighted. “Consumers
might be more protected if they were
both long and short, or trying to generate
alpha from the short side. Hedge funds
and liquid alt mutual funds can achieve
that goal.
“To the retail investors, if they had more
liquid alt funds where they can take in
The Hedge Fund Annual 2018
smaller amounts of money that would
make sense. If hedge funds could get onto
401k platforms of a broader range of com-
panies that would be helpful too.”
The support shown to Aldoroty by his
colleagues at the Global Custodian awards
said a lot about the prime services head.
Earning one of the most rapturous set of
applause heard all evening, he collected
his silverware backed by great enthusiasm
from the room.
Evidently a team player, Aldoroty says
the people he’s worked with throughout
the years have been a big part of his jour-
ney, and a major reason he’s still operat-
ing in the sector.
“I’ve managed people for the bulk of my
career, since I was in my second year at
Goldman. I like helping people in their
careers and seeing them become the most
effective professionals they can be. There
are a lot of people who worked for me in
the past, who now work at competitors.
I’m still in touch with them and it’s been
great to see them progress.
“I’ve got a lot of good people around me,
I’ve made a lot of good friends and had
great fun,” he concludes.