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By Beverly Chandler, Opalesque London:

"Managing money to make consistent gains in this risk on / risk off environment has been difficult for everyone in the investment industry" says Sean Molony, Senior Investment Specialist, at $2.6bn fund of fund group International Asset Management. It has also been challenging for hedge fund managers as well.

"How are they coping? Well, we have seen for some time above average levels of volatility in bonds, currencies, commodities and equities" says Molony. "In equities, there have been periods of calm but these have been followed by sharp spikes. Fund of hedge funds managers have been able to manage their portfolios with substantially reduced levels of risk despite the ongoing dispersion of returns from hedge fund managers within strategies."

These tough markets require strong portfolio management skills. "If you look at our fund of fund portfolios, by having strong portfolio construction skills, we have been broadly able to protect capital and manage them with lower levels of volatility than our peer group."

And Molony believes that the macro-economic background does not look set to recover any time soon. "The outlook in the short term is highly problematic to predict" he says. "Just in the last two weeks we have seen an improved European plan followed by a surprise Greek referendum and now a resignation in Italy - all within a couple of weeks. These twists and turns make it challenging for managers to position themse......................

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