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Alternative Market Briefing

AIMA examines the role that hedge funds can play in institutional portfolios in new paper

Thursday, May 23, 2013

Benedicte Gravrand, Opalesque Geneva: - The Alternative Investment Management Association (AIMA)’s Investor Steering Committee surveyed some of the most important institutional investors in hedge funds globally, with combined assets of more than $400bn, and produced a paper called 'Beyond 60/40: The evolving role of hedge funds in institutional investor portfolios.’

Here is some of what they found from this survey:

  • Institutinal investors are leaving behind the traditional 60% equities/40% bond model and adopting alternatives more (hedge funds in particular);
  • Reasons for using hedge funds are their risk-adjusted returns, diversification, lower correlations, lower volatility and downside protection;
  • Hedge funds are more and more seen as a way to access opportunities and tailor portfolios, rather than as a separate asset class;
  • Most of those surveyed have increased their hedge fund allocations since the recent crisis, and most are planning to continue to do so;
  • Due diligence on hedge funds is becoming more time-consuming, sometimes lasting up to two years;
  • Investors are happy about hedge funds’ increased transparency, although some are wary of being given too many unnecessary details;
  • They are also happy about the increased hedge fund regulation, although some are concerned about the costs, and the rest......................

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