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Summary List Placement

Low interest rates means high hedge fund flows.

The hedge fund industry — which began the year with the most assets it has ever had, with more than $3.6 trillion — often has its performance compared to that of the equities market, as investors with low-fee index funds gloat over those paying multiples of that for underwhelming performance. Prior to 2020, money was flowing out of hedge funds, but thanks to the resilience many managers showed in March of last year, $16 billion more flowed into the industry than out of it in the second half of 2020, according to Hedge Fund Research. 

But for institutional investors like pensions, endowments, and foundations, hedge funds are not viewed in terms of how they perform relative to an equities benchmark, but instead by how correlated they are to the broad stock market. 

“It’s not the role of the hedge fund to beat the equity market,” said Jens Foehrenbach, chief investment officer of Man FRM, a division of Man Group. 

The role in these big investors’ portfolios instead is similar to that of a bond — diversification from equity markets and consistent returns. And, with bond yields suffering in the low-interest rate environment, institutions are …read more


Source:: Businessinsider – Finance

      

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