The uncertain economic climate will place a greater value on larger, more stable hedge funds in 2009, according to the hedge fund group at Global Investment House.
The uncertain economic climate will place a greater value on larger, more stable hedge funds in 2009, according to the hedge fund group at Global Investment House.
It says larger funds will be in a position to benefit from numerous opportunities emerging from the current market dislocations.
Shailesh Dash, head of alternatives at Kuwait-based Global Investment House (pictured), says that while the outlook on near-term returns for hedge funds remains unclear, opportunities are abundant for investors with a longer-term view to take advantage of significant distortions in the market.
He says opportunistic allocation decisions are a key driver of returns for hedge fund investors. In order to take advantage of the existing and emerging dislocations and distressed opportunities for hedge fund managers, he suggests that it is important to achieve diversification by investing in a diversified fund that makes tactical allocations to areas of the hedge fund universe with the most attractive risk-reward profiles.
Joseph Joseph, head of hedge funds at Global Investment House, adds that while 2008 was certainly volatile and not a good year for delivering returns, he is strongly convinced that investors can still benefit from hedge funds.
He says that although the market dislocation and deleveraging effects create challenges for return predictability in the near term, market dislocations present tremendous opportunities in the medium and long term.
Despite the negative press surrounding hedge funds, they beat returns of the broad long-only market (as defined by the S&P 500) by some 2000 basis points.
Joseph believes one of the most important mandates of hedge funds is to limit down side risk.
Global is taking the step of returning capital to investors in its Zenith Fund in the form of a special dividend.
