Investors Should Refresh Their Perspective on Hedge Fund Allocations and Confirm The Role Each Fund Serves, According to New Cambridge Associates Report
BOSTON, MA--(Marketwired - Dec 11, 2013) - During a bull market, investors may naturally yearn for less-hedged exposure -- and in turn underestimate the positive long-term impact that hedge fund allocations can provide via differentiated returns, capital protection and reduced volatility.
At the same time, careful hedge fund manager selection is more important than ever --given the evolution of the hedge fund industry, explosion in number of funds and visibility of some larger funds with lackluster performance. Every allocation should involve a granular assessment of each hedge fund's value proposition as reflected in its investment philosophy, terms, fees and business operations, according to "Hedge Funds: Value Proposition, Fees and Future," a new report from Cambridge Associates, the global investment advisor.
"To a certain degree, the concept of alpha has been lost in a recent market environment of higher correlations across assets and narrower return dispersion across managers. But we believe that over time the institutional investors that do best embrace active management and understand that partnering with talented hedge fund professional adds value to diversified portfolios," said report coauthor Jon Hansen, Managing Director at Cambridge Associates.
Successful Hedge Fund Investing is a Partnership
"The challenge remains constant and is particularly important today: Identify the right hedge fund partners and pay the right price for alpha," added Gordon Barnes, Manager of Business Risk Management at Cambridge Associates . "Our clients' best hedge fund relationships are with managers that care not just about their risk-adjusted track records, but also are committed to being good business partners."
The report underscores key concepts and realities that Cambridge Associates believe limited partners -- as well as managers -- should keep front and center. For instance...
"Hedge funds can add value to diversified portfolios, but not all hedge funds do -- not even close. Of the 9,000 or so entities self-titled as hedge funds, only a small percentage -- think single digits -- offer compelling value propositions for institutional investors. Given the odds, good manager selection is essential," said Hansen.
For a copy of the report, "Hedge Funds: Value Proposition, Fees and Future," please contact Frank Lentini, Sommerfield Communications at (212) 255-8386 / Lentini@sommerfield.com.
About Cambridge Associates
Founded in 1973, Cambridge Associates is a provider of investment services to institutional investors and private clients worldwide. Today the firm serves more than 950 global investors and delivers a range of services, including investment consulting, discretionary investment solutions, research and tools (Research Navigatorsm and Benchmark Calculator), and performance monitoring, across asset classes. Cambridge Associates has more than 1,100 employees based in eight global offices in Arlington, VA; Boston; Dallas; Menlo Park, CA; London; Singapore; Sydney; and Beijing. Cambridge Associates consists of five global affiliates that are all under common ownership and control. For more information about Cambridge Associates, please visit www.cambridgeassociates.com.
Contact Information:
Media Contact:
Frank Lentini
Sommerfield Communications, Inc.
212-255-8386
lentini@sommerfield.com