WEST PALM BEACH, FL (HedgeCo.Net) – Hedge fund conference panelists have told attendees that hedge fund returns will be lower over the long term, as too many funds will be chasing the sameopportunities in the global markets. However, hedge funds will still provide its investors with real returns, according to the group. Over the past five months hedge fund returns have dwindled to therange of about 2.0-2.5%, such consequence resulted from smaller trading and mispricing opportunities in the markets.
2004 returns may end up as the worst year for hedge funds according to the panelists. Part of the problem according to them, is the tidal wave of new capital coming into the markets. Such new capital has reduced new trading opportunities available to hedge funds.
Ross Dunlop, executive chairman of Highway Insurance said, “2004 has been a difficult year but our hedge funds have done better than cash and fixed income: We used to have all our money in cash and fixed income. Hedge funds were a way of taking some risks out. (Preserving) capital is key to the insurance business. It determines how much business we can write.”
While trading opportunities have decreased in the equity markets, hedge fund managers began to search for alternative ways to make money. Some have turned to the commodity markets, and others sought opportunities in the emerging markets.
Luc Estenne, chief executive officer at hedge fund manager Partners Advisers said, “Lack of performance this year has been attributed to inflows, but the main factors have been lack of volatility and trends.� Other managers noted that their hedge fund allocation has grown steadily in recent years, and such trend is likely to continue as growing levels of institutional money is coming to the markets.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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