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Alternative Market Briefing

Leading European consultant FERI: Demand for hedge funds to remain high in 2018

Friday, September 07, 2018

Laxman Pai, Opalesque Asia:

FERI, the Bad Homburg, Germany based independent asset manager and consultancy says that demand for hedge funds will remain high in 2018.

While seeking to protect their allocation from market fluctuations, institutional investors are still looking for a way out of the interest rate trap and are increasingly opting for hedge funds when making investment decisions.

Marcus Storr, Head of Hedge Funds at FERI, explains:"Many pension funds and pension schemes are gradually getting their capital paid back from bond allocations that once offered attractive yields. As there is no consideration of reinvesting in fixed income markets due to the low interest rates, a larger proportion of this capital is now going into alternative investments. Demand for hedge funds will therefore remain high in 2018."

FERI quoted Eurekahedge, pointing out that the assets under management (AUM) in the hedge fund industry have reached an all-time high of $3.4tn.

In 2017, $31.7bn was paid into UCITS and offshore funds globally, and in the first half of the current year this figure grew by a further $5bn net, according to a press release from FERI.

According to FERI, the main reason for opting for alternative investments, apart from enhanced diversification and lower correlation to equities and bonds, is the lower risk, measured as volatility.

Whereas, for instance, the MSCI World Total Return showed 14.72% volatility from January 2002 to June 2018,......................

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