Sat, May 28, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Opalesque UCITS intelligence

Editorial

Friday, May 16, 2014

Why hedge funds?

Total assets under management for the hedge fund sector have reached an historical peak at estimated USD 2.6 trillion in 2013. The projections are at USD 3.3 trillion by 2015 with a compounded annual growth rate at 15%.

Despite these numbers and the general perception in Europe that investors are increasing investment flows, most of them, either pension funds or insurance groups, are still questioning hedge funds in their asset allocation. We notice that recent investment flows into liquid equity strategies come from massive outflows in Managed Futures.

As outlined by Lyxor Asset Management in its latest white paper: in the post-2008 environment, it is no longer possible to consider hedge funds as a single asset class. Lyxor recommends to consider classifying hedge funds in two groups: the substitutes and the diversifiers. The substitutes aim to improve risk/return profiles of portfolios by replacing equities and bonds, the diversifiers aim to generate absolute returns. In a traditional allocation process, investors would consider allocating in equities and bonds with a third complementary allocation in hedge fund; Lyxor values hedge funds within the two core single assets portfolios as equity/bond substitutes with a third diversifier portfolio to be added, composed of strategies delivering more significant alpha.

However, investing in hedge funds is still a very sophisticated process that explains the trust of investors in brand names and the phenomenal success of absolute returns funds managed and distributed by the large asset managers: Schroders, JP Morgan, Henderson or Standart Life Investments. Alternatively, the UCITS platforms are great contributors to facilitate comprehensive accesses to liquid hedge fund strategies. Their success paves the way for even more mature investments in hedge funds.

We investigate in this edition the model of independent platforms and start our country focus distribution analysis by Switzerland: what are the key ingredients to sell in Geneva or Zurich? How to maximize sales efforts?

We hope that you will enjoy this edition and are looking forward to receiving your feedback!

The Lyxor paper “Hedge Funds in strategic asset allocation” is available on www.lyxor.com.

Sophie van Straelen
Editor
Sophie@opalesque.com

Sophie

About your editor: Sophie van Straelen and Asterias Ltd: Sophie van Straelen started her professional career in investment banking spanning derivative markets and hedge funds. Her 12 year experience in investment banking provided a strong base to found Asterias Ltd, the consultancy located in London, specialised in delivering strategic insight in distribution for service providers and hedge fund managers. Listed in 2009 by EFinancial News as one of the top 100 most influential women in finance in Europe, she is a recognized, valuable and independent source of analysis for the media, lobbying groups and investors.



 
This article was published in Opalesque UCITS intelligence.
Opalesque UCITS intelligence
Opalesque UCITS intelligence
Opalesque UCITS intelligence
Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Performance - Hedge fund ETFs take a battering, Have long-short credit funds delivered?[more]

    Hedge fund ETFs take a battering From ETFStrategy.co.uk: It was a blow for the hedge fund world when Hillary Clinton’s son-in-law Marc Mezvinsky announced he would be closing his Greek-focused fund after it plummeted in value by 90%, just two years after it launched. For passive investor

  2. Americas - Australian banks sending U.S. hedge funds broke, Ryan Puerto Rico ‘rescue’ bill could be windfall for hedge funds[more]

    Australian banks sending U.S. hedge funds broke From SMH.com.au: US hedge funds are not having the best of years. Profits are hard to find, they're underperforming and the punters are losing patience, withdrawing US$15 billion ($20.8 billion) in the March quarter. They're expected to wit

  3. Investing - Billionaire Wilbur Ross likes the look of Chinese bad loans, Hedge funds are still relevant in a diversified portfolio: 4 fundamental criteria for superior manager selection[more]

    Billionaire Wilbur Ross likes the look of Chinese bad loans From Bloomberg.com: U.S. billionaire Wilbur Ross said he’s considering investing in nonperforming loans in China, as Moody’s Investors Service said that the nation has the tools to prevent a financial crisis in the near term. I’

  4. Investing - Blackstone gives pricey Canadian energy and property thumbs down, One of the most concentrated hedge fund bets is getting crushed, Facebook is hedge funds' new tech darling,[more]

    Blackstone gives pricey Canadian energy and property thumbs down From Bloomberg.com: Canada’s energy assets are uneconomic and real-estate markets overvalued, making them less attractive for investment than in the U.S. and elsewhere, according to Tony James, president of Blackstone Group

  5. Study - Only 30% of institutional hedge fund portfolios beat the benchmark[more]

    Bailey McCann, Opalesque New York: A new study from CEM Benchmarking, an independent provider of cost and performance analysis for pension funds, shows that only 30 percent of institutional investors hedge fund portfolios beat the benchmark after fees. The study provides in depth analysis of real