The material on this site is for financial institutions, professional investors and their professional advisers. It is for information only. Please read our Terms & Conditions, Privacy Policy and Cookies before using this site. Please see our Subscription Terms and Conditions.


All material subject to strictly enforced copyright laws. © 2021 Euromoney, a part of the Euromoney Institutional Investor PLC.

Hedge funds turn to relative values

As alternative managers struggle to make absolute returns in difficult markets, they’re trying to get their investors to judge them on relative performance measures. It’s a fundamental change for the industry, but can it halt an expected flood of redemptions?

Hedge funds have been accused of lots of things over the years. Being too open and honest is rarely, if ever, among them.

But with investment returns proving hard to come by, many hedge funds are being forced to placate nervous investors by giving them more information than ever before about exactly how they go about making money.

In conversations with leading figures, a picture emerges of a business populated with a depressed group of former high-flyers who are as uncertain about the future as everybody else.

The stereotype of the brash, hard-charging hedge fund manager, investing with flair and verve, has seldom seemed as flawed.

Dwindling performance as a result of geopolitical and market volatility means that absolute returns, for so long the holy grail for hedge funds – not to mention their promise to investors – are rare.

Instead, managers and their investors have had to settle for relative returns. The question then is how long before investors conclude that a hedge fund posting anything other than absolute returns – those uncorrelated with the wider market – is no longer worth the outsized fees they charge compared with more traditional investors.

You have reached premium content. Please log in to continue reading.

Read beyond the headlines with Euromoney

For over 50 years, our readers have looked to Euromoney to stay informed about the issues that matter in the international banking and financial markets. Find out more about our different levels of access below.

SUBSCRIBE ONLINE TODAY

Unlimited access to Euromoney.com and Asiamoney.com

Expert comment, long reads and in-depth analysis interviews with senior finance professionals

Access the results of our market-leading annual surveys across core financial services

Access the results of our annual awards, including the world-renowned Awards for Excellence

Your print copy of Euromoney magazine delivered monthly

£73.75 per month

Billed Annually

FREE 7 DAY TRIAL

Unlimited access to Euromoney.com and Asiamoney.com, including our top stories, long reads, expert analysis, and the results of our annual surveys and awards

Sign up to any of our newsletters, curated by our editors

LOGIN NOW

Already a user?

We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree