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Alternative Market Briefing

Banks’ retreat from traditional activities boosts hedge funds profits

Wednesday, June 26, 2013

Robert Graham-Smith
From Komfie Manalo, Opalesque Asia:

Banks retreating from their traditional activities, particularly in Europe, is boosting hedge fund returns, agreed hedge fund managers who attended the latest Opalesque 2013 Australia Roundtable sponsored by Eurex and Australian Fund Monitors.

Robert Graham-Smith, portfolio manager at Perpetual Investments said that the retreat of banks from their usual portfolios has created opportunities for the broader alternative fund industry and particularly private markets over the last six to 12 months.

"We are seeing the opportunity to achieve up to low double digit returns through managers lending money to corporates," Graham-Smith said and added, "Although these are less liquid opportunities, earning a strong contractual return while focusing on strong companies and remaining high up in the capital structure we believe is a very attractive proposition versus more liquid bond markets."

He added that most of these opportunities are being driven by regulatory changes such as Basel III where traditional lenders are not providing finance to strong middle market corporates in some cases. Monik Kotech of Insync Fun......................

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