An investment in hedge funds can contribute to a higher risk-adjusted return in an investment portfolio. Hedge funds can provide positive returns in periods when the stock market falls. They cover a wide range of different investment strategies and aims to make money in both rising, falling and flat markets.
Over the past 25 years, hedge funds provided a higher return with lower risk than traditional equity funds. In 2008, hedge funds had a bad year. In the turmoil that occurred before and after the bankruptcy of Lehman Brothers in the autumn of 2008 caused many of the markets, hedge funds operate in total collapse, and many funds did not achieve its goal of always providing a positive return. The broad hedge fund indices fell by 15 to 20% in calendar year 2008. (Remember, stock markets fell by 40 - 50%.) In 2009, however, the return of hedge funds was back on the long-term trend.
Our main partner is GAM (see description under Equity funds). You can read more about hedge funds by clicking on the link to the booklet "Looking for Alpha", in which we have described the investment classes Hedge Funds, Private Equity and Property.