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Alternative Market Briefing

Edhec Risk Institute report finds the 'Absolute Return’ term is misleading

Monday, April 30, 2012

Beverly Chandler, Opalesque London: The latest edition of the Edhec Risk Institute’s Investment Management Newsletter features a report that speculates that mainstream managers and hedge funds are continuing in a head to head battle for territory, and one that is based on a misleading piece of nomenclature.

In a piece entitled, 'Mainstream managers and hedge funds: battle joined?, Dr Arjuna Sittampalam, Research Associate with EDHEC-Risk Institute and Editor, Investment Management Review says: "In recent years, hedge funds have attacked the business of traditional asset managers, targeting their customers, both the institutions and the retail public. But the signs are that the mainstream is successfully fighting back".

Sittampalam finds that hedge funds going into these new territories have been driven by two important developments: the UCITS III directive, which has allowed a version of hedge funds to be sold to retail investors under the much-prized UCITS label and, a large element of the hedge funds’ customer base, high-net-worth individuals, were put off in 2008 by the illiquidity of the sector at a time of crisis.

Sittampalam writes: "The hedge funds’ invasion of mainstream territory is being defended successfully by the traditional houses, which are also hitting back in hedge fund territory. According to Helena Morrissey, Chief Exec......................

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