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Alternative Market Briefing

Investors rethink hedge fund allocations

Wednesday, July 29, 2020

Bailey McCann, Opalesque New York:

A new report from bfinance suggests that asset owners are maintaining a cautiously optimistic investment outlook despite uncertainty over the state of the global economy in the covid era. Bfinance spoke to 368 senior investors for the report. They represent pension schemes, insurers, endowments, foundations, family offices, sovereign wealth funds and other entities with combined invested assets of approximately $11 trillion.

According to the findings, 82% are happy with how their portfolios have performed so far. That said, there are some rough spots and hedge funds appear to be one of them. The report shows widespread frustration with hedge fund performance as well as the performance of emerging markets debt and risk premia strategies. 48% of investors in the report said they were dissatisfied with the performance of their hedge fund portfolios. 64% said they were dissatisfied with alternative risk premia and 53% of investors were dissatisfied with emerging markets debt.

"Within the hedge fund sector we have seen wide dispersion of manager returns both within and between strategies as a result of C-19 disruption," said Toby Goodworth, Head of Liquid Markets at bfinance. "The sheer speed of market dislocation in March meant all but the fastest trading-oriented strategies were effectively passengers through the turbulence. A number of high-profile names produced unexpected losses and failed to demonstrate the expected diversificati......................

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