Alternative Market Briefing

Discolo: lower returns, difficulty finding alpha likely to push fees lower

Wednesday, June 06, 2012

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Bob Discolo Bailey McCann, Opalesque New York:

Bob Discolo has been investing in hedge funds for the last 20 years, he now oversees the hedge fund business for US-based PineBridge Investments. PineBridge was formed two years ago after spinning off from AIG Asset Management. The firm now manages approximately $70bn in assets, $3.7bn of which are in hedge funds. Discolo was recently interviewed by Greg de Spoelberch for Opalesque TV.

Discolo creates customized hedging solutions for institutional investors and helps them allocate to funds either through customized accounts or consultation. According to Discolo, investors are beginning to get smarter when it comes to understanding the realities of hedge fund investing. He notes that 2008 provided an education for investors on all of the possibilities good and bad that come with investing in hedge funds.

"People expected hedge funds to make money. A lot of people were under the mistaken impression that hedge fund should make money every single year. They were also on the impression that if a hedge fund is market neutral, it should never lose money."

Discolo explains that investors need to be prepared to stay with a manager over the long haul, "if you stick with the managers and if you believe in them, like in July 2008 what happened in the next few months? I think liquidity was the big issue there. If you stuck with the managers......................

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