LONDON (Reuters) – The recent sharp drop in equities markets is a timely reminder of the benefits of alternative investments like hedge funds, a senior Credit Suisse bank executive told Reuters in aninterview on Thursday.
The hedge fund sector had lost some of its sparkle as equity markets soared, but sharp turns in stock indexes this week turned the spotlight back on what hedge funds and other products can do to protect capital, said Craig Lewis, director and head of investment solutions at the private banking division at Credit Suisse (UK).
“With the recent meaningful equity market volatility, it is an opportune time for clients to revisit the inclusion of hedge funds in their portfolios.”
On Wednesday the FTSE 100 shed 170.7 points, or 2.9 percent — its biggest percentage fall since March 2003 — after strong U.S. inflation data spooked investors and a split vote on rates by the Bank of England raised expectations of higher UK borrowing costs. Shares weakened slightly on Thursday.
“These types of market events will serve as a reminder to investors to diversify across asset classes, a strategy we have been discussing with our clients for many years,” he said.
Hedge funds, estimated to hold up to $1.5 trillion of assets based on some measures, use short-selling, leveraging and derivatives to make money in all markets and preserve investor’s capital.
