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Alternative Market Briefing

Investors must come to terms with investing in hedge funds via a small team

Tuesday, August 16, 2016

Komfie Manalo, Opalesque Asia:

Investors must come to terms with the problems of investing in hedge funds via a very small team by looking at it in terms of contribution in risk terms, stated Keith Haydon, CIO of Man FRM, during the latest Opalesque 2016 U.K. Roundtable.

He said, "From speaking to many investors, there is a serious attempt to come to terms with the problems of investing in hedge funds via very small teams, and a lot of people now need help."

And what does he recommend to investors in that situation? Haydon said that "People need to look at it in terms of its contribution in risk terms. Historically, whenever they have done that it has forced them into CTAs, because they trade at a higher volatility and generally they have a lower correlation to the rest of the portfolio. But that's a single, very concentrated factor exposure. There are now more rounded answers to this problem – and if you want those answers…come and talk to us!"

Several drivers behind grown demand for hedge funds

Haydon noted that since 2008, there has been a structural move towards large institutions managing their own investment portfolios of hedge funds because investors think it gives them more control and it is also cheaper, given that they tend to entrust those investments to small teams. "But investing in hedge funds is a very intensive business, at least doing it properly is, and ......................

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