Did you know the number of private funds increased by 10.7% in 2022?
With the number of private equity funds increasing and private fund assets reaching new heights, compliance professionals in private funds must stay abreast of the shifting regulatory landscape.
Having worked with countless compliance programs at private equity funds, we know how daunting this task can be, however, with the right insight, compliance professionals can ensure the ongoing efficacy of their compliance program. In the 2023 edition of the Investment Adviser (IA) Industry Snapshot, we highlight key statistics, explore the changing dynamics within the financial landscape and offer insight to help compliance professionals like you navigate these changes.
Here is some insight from that report that could impact private equity funds like yours.
Private equity funds’ rapid growth
The rapid growth in the number of private equity funds and assets under management presents both opportunities and challenges for private funds like yours. On one hand, it opens up avenues for increased capital deployment and potential returns, while on the other hand, it intensifies competition, regulatory scrutiny and the need for robust compliance measures.
- Over the past decade, private equity funds have experienced faster growth in terms of both the number of funds and assets under management compared to hedge funds.
- Private equity funds now account for 44.2% of the number of private funds and 32.8% of private fund assets.
Insights from Form ADV Part 1
Form ADV Part 1 provides essential insights into separately managed accounts, registered funds, wrap fee programs and private funds.
In our IA Industry Snapshot, we found that:
- Advisory firms registered with the Securities and Exchange Commission (SEC) provided asset management services for individuals and institutions in separately managed accounts, registered funds, wrap fee programs and private funds.
- In 2022, 73.2% of advisory firms managed separately managed accounts, while 36.2% advised private funds.
- Despite a challenging market environment, the number of private funds increased by 10.7%, while private fund assets grew by 1.6% in 2022.
- In 2022, more than 40% of new private funds were private equity funds.
- Over the past decade, the percentage of private fund assets invested in private equity funds has increased, while the percentage invested in hedge funds has declined.
With the ever-evolving regulatory landscape, compliance professionals at private equity funds play a critical role in ensuring adherence to regulations and safeguarding investor interests. They face the task of keeping up with the changing regulatory requirements, maintaining robust compliance programs and implementing effective risk management strategies.
So, how can compliance professionals (like yourself) stay ahead of potential risk points? At ComplySci, we offer a range of services and solutions tailored to your specific compliance needs. Some of our services include:
- Managed services.
From marketing review to administrative tasks, we’ll take on the tasks that take you away from your priorities so you can focus on elevating your compliance program.
- ComplySci regulatory technology solutions Automation can be particularly helpful in streamlining processes, tracking activities, archiving information and ensuring your firm is audit-ready.
As private equity funds continue to thrive and evolve, compliance professionals like yourself play an increasingly vital role in ensuring regulatory compliance. The changing dynamics and growing regulatory complexities necessitate their expertise and proactive approach.
At ComplySci, we offer solutions to help you navigate the ever-changing financial landscape. Need further assistance? Schedule a demo today!