18/10/2011
By Matt Ritchie
Alternative investments may achieve better performance than a wide range of other asset classes but that does not mean they are immune to losses, the alternative investment council of the Swiss Funds Association has warned
In a presentation at a conference held by the council, Swiss Capital Alternative Investments CEO Hans-Jörg Baumann said hedge funds had fared demonstrably better than equity investments over both the short and long terms.
Hedge fund performance in the first nine months of this year, measured by the HFRI Fund Weighted Composite Index was, -4.8 per cent compared with -20.9% for European equities as measured by the MSCI Europe index.
Baumann said the corresponding figures for the past 10 years were +88.3 per cent for hedge funds and 28 per cent for European equities. Over this period only investments in gold, emerging market equities, Asia ex Japan, and certain government bonds have offered higher returns.
“We are still in a difficult market environment, with the risk-free rate around zero and liquidity asymmetric and expensive. The current developments in several G-10 countries are pointing to recession, and investors are tending towards security and capital preservation. The time intervals for investment decisions are also getting increasingly shorter. Managers that pursue an active investment style, such as those of hedge funds, are prepared for this and can deal with such an environment,” said Baumann.
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