Hedge Funds Review Magazine- Investors are being unsuspectingly exposed to long-bias portfolios or high-beta strategies, according to the managers at Cartesian Capital, the Edinburgh-based investment boutique.<\/p>\n
They believe many managers simply use index futures as the \u00c3\u00a2\u00e2\u201a\u00ac\u00cb\u0153short\u00c3\u00a2\u00e2\u201a\u00ac\u00e2\u201e\u00a2 element of their portfolios and can consequently under-perform when markets come under pressure.<\/p>\n
\u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201cIndex shorts can be initiated quickly but end results may not be desirable,\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u009d said Andrew Kelly, lead manager of the Resolution Cartesian UK Equity Long\/Short fund. \u00c3\u00a2\u00e2\u201a\u00ac\u00c5\u201cIf the underlying long portfolio is mid-cap biased then shorting a large-cap index may not provide protection, as demonstrated in September when the UK mid-cap index fell 2.4% while the FTSE rose 2.6%. Stock picking shorts requires a higher degree of diligence but ultimately provides a better quality hedge and potentially a higher degree of reward.\u00c3\u00a2\u00e2\u201a\u00ac\u00c2\u009d<\/p>\n
Kelly believes that many investors will have been unpleasantly surprised by the poor performance of their hedge fund during recent market volatility, and said hedge funds are failing investors.<\/p>\n