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Alternative Market Briefing

Cultural issues, regulations prevent established firms like Fidelity from expanding into alternative investment strategies - Opalesque Roundtable Boston

Thursday, June 10, 2010

From Precy Dumlao, Opalesque Asia:

Cultural issues and regulatory requirements may prevent established firms like Fidelity and Street from fully adopting alternative strategies, said Timothy Krochuk, Managing Director and portfolio manager with GRT Capital Partners, LLC. , a Boston-based investment adviser with 11 alternative investment strategies, and one mutual fund, during the latest Opalesque Roundtable Boston .

Krochuck explained that largely due to the differences in mentality and earnings potential between hedge funds, long only funds, and mutual funds, hedge funds would not be an easy addition for most firms to bring onto a platform. He added that such big firm would likely find themselves with "two classes of citizenry" and almost everyone would rush to get involved in the "sexy and highly profitable hedge fund side."

Firms that try and tackle both also risk an ongoing debate over what is more important strength of performance versus the ability to manage an enormous amount of money. A manager overseeing the largest portfolio within the firm may feel unappreciated when his performance record is compared to a more profitable, but much smaller hedge fund.

"The other issue is related to disclosure. Reporting of short positions has been required in the past, and could conceivably occur again under tighter regulation. ......................

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