Our industry
Alternative investments are set to play an increasingly important role in stabilising investment portfolios.
5.7%
annualised return over 10 years to 30 June 2010 HFRI Fund Weighted Composite Index.
Investment management
Our investment managers include single managers such as Man AHL and fund of funds managers such as Man Multi-Manager.
Document library
- Industry development
- Current situation
Industry development
The alternative investment community is renowned for its wide range of innovative strategies and trading techniques. Equity hedge, utilising both long and short positioning, is the founding strategy of the hedge fund industry and its origins can be traced back to 1949. While equity hedge continues to attract investors, other trading styles have evolved with the passage of time. Consequently, the range has expanded to include the likes of managed futures, global macro, relative value, event driven and new alternatives.
The high liquidity and exceptional diversification potential of managed futures funds continues to ensure their popularity, with assets under management rising from $41 billion in 2001 to over $212 billion by the end of Q1 2010 (according to research conducted by Barclays Group).
Current situation
Like most other asset classes, the growth in hedge fund assets reversed sharply in the second half of 2008 as the credit crisis led to a broader failure of confidence in financial markets, triggering a massive flight to the safety of cash and government bonds. However, hedge fund assets under management increased by 13% in 2009 (according to research conducted by IFSL) and the industry has continued to recover strongly in 2010.
The number of hedge funds in existence remains some way below its peak which demonstrates that the events of 2008 acted as a form of quality control with many weaker hedge funds folding. As a consequence, the future industry will be shaped by tighter regulation, improved governance, higher operational standards, greater transparency and more astute investment management.
Growing recognition of the importance of building robust investment portfolios, and increasing awareness of the limited diversification opportunities available through traditional asset classes is encouraging greater investment in hedge funds. More recently, regulatory directives such as UCITS III have allowed increasing numbers of investors to take advantage of the efficient risk dispersion and multiple sources of return that many hedge fund strategies are able to provide.
