As institutional investor portfolio construction has evolved over the past 50 years from a basic split between equities and bonds to more complex allocations in a diverse group of investments, hedge fund managers have adapted to such evolution, offering products tailored to the changing appetites of institutional investors.  In its sixth annual asset management Industry Evolution Report, Citi Business Advisory Services (Citi) examines these “convergence products” and their availability to investors and fund managers.  This article, the second in a three-part series, addresses Citi’s assessment of investment managers’ adaptation of their products to investors’ needs and the evolution of hedge funds following the global financial crisis.  The first article discussed the methodology employed by Citi in conducting its survey; tracked the evolution of modern portfolio theory; examined portfolio weaknesses exposed by the global financial crisis; and reviewed the alignment by investors of their portfolios to certain risk factors.  The third article will explore how asset managers may tailor their product offerings and marketing efforts to meet the evolving needs of institutional investors and how they may offer “institutional” portfolio construction to retail investors.  For coverage of Citi’s 2014 survey, see “Citi Survey Highlights Opportunities for Hedge Fund Managers as Institutional Investors Seek to Optimize Their Portfolios (Part Two of Two),” Hedge Fund Law Report, Vol. 7, No. 23 (Jun. 13, 2014).