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Alternative Market Briefing

Hedge funds met or exceeded targets set by investors but dispersion expected to stay high

Tuesday, March 30, 2021

Laxman Pai, Opalesque Asia:

Hedge Fund performance over the past 12 months has either met or exceeded targets set by investors, said Global Hedge Fund Benchmark Survey, conducted by the Alternative Investment Management Association (AIMA), Simmons & Simmons, and Seward & Kissel.

However, performance dispersion which has been a prominent feature over the past 12 months is likely to continue, highlighting the importance of manager selection and ongoing review, it said.

"The strong hedge fund performance in navigating a series of market drawdowns during 2020 has not gone unnoticed by investors. With the industry continuing to report strong performances, there is a growing consensus that the hedge fund industry will record its first year of net inflows since 2017," the survey said.

During the peak COVID-19 market volatility in the first half of 2020, hedge funds on average halved the losses incurred by equity markets and were able to balance their portfolios.

According to the survey, hedge funds are responding to investor needs with arrangements that are more closely aligned both to the requirements of the investor and its underlying investment strategy/securities.

Management fees charged by more established hedge reached a tipping point with just 14% revising their fees down over the last 12 months and one in four over the past three years, it said.

Performance fees across the industry continue to hold up reasonably well with investors prepared to i......................

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