What are investors looking at?
It is likely that the balance will shift away from fund of funds towards single strategies as investor sophistication grows. A recent survey confirmed this trend and notes the following single strategies to be of interest to investors:[6] • Long short equity • Distressed debt • Global macro/CTAs • Emerging markets The above strategies share in common that they all add some equity exposure back to the portfolio, can make money in sideways markets[7], and tend to avoid excessive leverage. Apart from distressed debt, they mainly trade exchange traded instruments, they tend to be liquid, transparent and avoid counterparty risk so prevalent in many OTC trades. Conclusions Hedge funds suffered from a period where they could no longer obtain cheap credit. Many credit providers have exited the business and counterparty mistrust remains. At the same time, hedge funds face the prospect of increased government regulation. However, offsetting this is the current dysfunctionality in the markets cre
