Retail investors increase allocation to regulated hedge funds

Mon Oct 25, 2010

Hedge fund UCITS products have gained popularity since interest rates decreased to less than 1% in many developed economies in response to the global financial crisis.

Assets under management for investment managers using absolute return and hedging strategies within the UCITS III wrapper are almost $60 billion and there around 600 funds, according to the HedgeFund Intelligence database.

Brandon Horwitz from HSBC Bank

Martyn Dorey, director for asset manager database Camradata, says that interest in absolute return products has been "massive" – especially for investors trying to beat cash or inflation.

He says: "From about 2000 to 2003 we had a bear market run that resulted in investors disliking short-term volatility. We have seen a massive appetite for absolute return products or funds that benchmark against inflation or cash – many that include hedging strategies."

Dorey adds: "Individual investors, pension funds or company pension schemes all want a consistent absolute return from their investments and consistent asset growth. Investors also prefer lower risk hedge funds than higher risk and want...

ISSN: 2151-1845 / CDC10004H

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