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From The Opalesque Team: Alexander Ineichen, managing director at UBS Global Asset Management, Zurich, has just issued his latest hedge fund industry update which looks at whether the hedge fund industry is likely to survive, and includes an industry outlook and a review.
Synopsis:
- 2008 was not a good year for hedge funds. One of the worst nightmares of any risk manager is not when markets fall but when markets fail.
- Hedge funds have turned out to be part of the financial system. In a situation where there is extreme duress, there is no "de-coupling." The hedge fund industry is most likely to survive the storm. However, relationships between managers and providers of risk capital, investors and banks, is changing. Hedge funds need some form of normality before starting to recover from their drawdowns. January and February 2009 are first indications that this is currently happening.
- We believe assessing risk of investment opportunities must be an active approach, not a passive one. In a world that is changing and uncertain, it does not make much sense to invest in a fashion that worked well in the past. What worked in the past could be regimespecific. As the regime changes, so do the opportunities and the strategies and approaches to unlock value and survive whatever stress the markets put upon us.
- Compound annual rate of return (CARR) of the HFRI Fund of Funds Composite Index was 8.1% for the period from January 1990 to January 200...................... To view our full article Click here
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