WEST PALM BEACH, FL (www.hedgeco.net) – UK-based Attica Alternative Investments said that hedge funds are as safe as government bonds if well-diversified. Such instruments could also yield similarreturns as those from government bonds. Attica’s chief investment officer, Jaakko Karki, told Reuters news that hedge fund strategies which use a variety of strategies for risk diversification couldalso be compared to investment-grade fixed income instruments.<\/p>\n
Karki said, “The risk and return aspects of a fund of hedge funds compared with bond portfolios are very similar . They are also very similar to capital preservation-focused funds however, although returns are similar, they are independent.” He added, “Over the last 15 years, the correlation of monthly returns between a government bond portfolio and a multistrategy fund of funds has been around zero.”<\/p>\n
Karki also said, \u00c3\u00af\u00c2\u00bf\u00c2\u00bdThat during a 15 year period, multistrategy hedge funds were able to preserve investor assets and capital with little losses.\u00c3\u00af\u00c2\u00bf\u00c2\u00bd Some of those years according to him included bear market period. The comparism of hedge funds to government bonds is particularly true for long\/short equity hedge funds Karki explained.<\/p>\n
Karki also said, “Long-only equity portfolios went through periods of exuberance such as the technology boom in the late 1990s when they generated double-digit returns, or periods like the 2000-2002 crash when investors experienced losses of 40 to 90 percent.\u00c3\u00af\u00c2\u00bf\u00c2\u00bd Their constraint according to him is their inability to apply effective risk management tools in their endeavors.<\/p>\n
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net<\/p>\n
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