WEST PALM BEACH, FL (www.hedgeco.net) – The head of investments at the Austrian APK multi-employer scheme has warned against fund of hedge funds. According to Guenther Schiend, aspiring hedge fundinvestors should be careful when they are selecting hedge fund products. Mr. Schiend who oversees the �1.8bn Austrian multi-employer scheme APK made his remarks in a conference in Geneva.
Mr. Schiend told the conference attendees at the Edhec business school that institutional investors should not choose hedge fund products if they fail to fully understand how hedge funds do their business. He said, �We would never invest in funds of hedge funds,� according to him.
He noted however that making selections for hedge funds could be a difficult endeavor. Schiend said his fund would generally ask the fund managers about their investment costs, and if the managers plan to allocate to different strategies, before even considering investing with such managers. He said he was unsure what strategies would do well in 2005, so he decided to invest assets in all the strategies.
Schiend believes that some hedge funds would fail to achieve positive returns in 2005, but investors come to hedge funds with the notion that such instruments are all weather investment solutions. He believes that investors should not devote assets in funds if the manager does not know if such strategy will achieve positive returns or not.
He also suggested that Pension fund managers hire independent experts to help them establish their own hedge funds. Schiend said, APK had already started moving in that direction. He does not like the idea of some hedge funds charging no management fees, but charges performance fees based on the profits generated by the strategy.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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