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By Beverly Chandler, Opalesque London:
Participants at the Opalesque 2012 Frankfurt Roundtable, sponsored by Eurex which took place at the Deutsche Borse in Frankfurt in June, found differing demands for alternatives from high net worth and institutional investors.
Erik Crawford, a consultant for family offices, reported that German high net worth clients have 10-12%, on
average, allocation to absolute return, while institutional investors have 2-3% on average. "Demand is weak" he said, "because
absolute return strategies have delivered disappointing returns in the past few years. In some cases allocations are
being reduced".
Crawford reported that most investors consider absolute return as a distinct asset class, "but at the family office we mixed absolute return
strategies into our long-only allocations to smooth returns. And we did in fact reduce volatility, but the return results
were mixed". Crawford reported that there has just been a general disappointment with absolute returns. "Maybe
because expectations were too high. I think we had realistic expectations, but even then returns were disappointing.
The hedge fund of funds were particularly disappointing. The double layer of fees certainly doesn’t help and I think
investors are moving away from these structures to cut out the second layer and get a more
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