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Alternative Market Briefing

Investors shift focus to relative return, bespoke portfolios

Monday, October 08, 2012

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Frank Frencentese
Bailey McCann, Opalesque New York:

Frank Frencentese is Global Head of Hedge Fund Investments for Citi Private Bank, which oversees approximately $5bn globally for single investment strategies and customized hedge fund portfolios for ultra high net worth investors. He joined Citi three years ago to build out the firm’s hedge fund advisory service, which includes investment research, product management, and portfolio construction.

In a recent Opalesque TV interview, he noted that the lack of hedge fund performance is making some investors – specifically ultra high net worth individuals, more skeptical of increasing their allocations to hedge funds. "There has been a healthy degree of skepticism around hedge funds – a lot of comments – 'hedge funds, they stole our money, they locked us up, they have not performed in four years, why do I need this in our portfolio?’" As such, much of his work now at Citi, is focused on investor education and advisory services during this low return period.

Despite the skepticism in these circles, institutions are allocating more than ever before to hedge funds. According to Frencentese, this is due to a realization by institutional investors that despite a decrease in absolute returns, hedge funds still offer a viable relative return.

"You look at years even like 2008 when hedge funds were sort of dirty word on......................

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