Hedge fund outlook positive but caution needed
While investors should think about increasing their hedge fund allocations, they need to be careful to ensure the quality of their investments is maintained, according to Ron Rolighed, the managing director of investor relations with Chicago-based Harris Alternatives.
In Australia this week, Rolighed said that while the quality of the best hedge fund investments had improved considerably over the past three or four years, there were still issues with respect to those which were less well managed.
“The quality of the best hedge funds is certainly higher today but as the hedge fund industry has expanded, the bad hedge fund investments have probably become worse,” he said. “Ultimately, given the amount of money entering the sector this may result in some major issues.”
Rolighed said this made it imperative for investors to gain the appropriate advice with respect to hedge fund investments.
He said that while a 5 to 6 per cent allocation towards hedge funds remained common, many institutions which had gained substantial experience in the area over the past three or four years were looking to double that allocation to 10 per cent.
Harris Alternatives has US$6.7 billion under management in alternative assets.
Rolighed said Harris Alternatives was optimistic about the outlook in the US, with investor sentiment appearing to be improving and with the market appearing to have moved beyond the impacts of the war on terrorism.
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