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Facts and trends live from the HedgeFundsWorld Conference in Zurich: Different panels discussed the use of hedge funds and the issues related to hedge fund investing. Dierk Wieringa, investment manager of insurer Winterthur, says he uses hedge funds to create income, like “coupon-clipping”. Winterthur uses hedge FOF and adds single managers to the portfolio. The selection of single managers is made inhouse. His due diligence team looks not only at performance, but looks into the business plan of the hedge fund. Low correlation to equity and bond market are important; the firm does direct investments also to cut fees.
Peter Fletcher on the other side explained as a family office, twelve years ago he was 100% invested in alternatives. For the last three years or so, he has been reducing this rate. He mentions a number of reasons, first and foremost that returns have become “average”. Attached to this is the question why paying 2 + 20 for average returns? Fletcher said nobody cared about fees when returns were 25-30% after fees. Ideally, hedge funds have to be a business for “the best of the best”, the market has accepted far too much average talent and operations. Fletcher said he is also doing managed accounts with managers, and has no issues paying fees when the performance is right. Fletcher complained hedge fund business has become a fee business and reminded that there are not only manager’s fees to be paid, but execution fees, prime broker fees, lawyers, administrators...................... To view our full article Click here
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