The Dawn of the Hedge Fund Era

Allocating assets into alternative solutions

Kier Boley, Co-Head and CIO, UBP Alternative Investment Solutions, Union Bancaire Privée (UBP)
Originally published in the August | September 2020 issue

More than once in recent years the return of hedge funds has been announced with varying degrees of conviction. It has taken the health crisis for both individual and institutional investors finally to seriously reconsider allocating assets to alternative solutions.

In the past ten years, hedge funds have struggled to offer any kind of satisfactory returns, constrained by persistently weak interest rates and a lack of volatility. While some strategies managed better than others, on the whole the sector fell short of expectations. In equities, hedge fund managers found it difficult if not impossible to compete with one of the most spectacular bull markets in history. With low global growth and flat inflation, this endless rally saw investors lunge for every pocket of growth and indices dominated by the GAFAMs (Google, Apple, Facebook, Amazon, Microsoft), setting record after record. In fixed income, the flood of liquidity released by central banks meant any company could access credit, including those with more dubious debt profiles, making it difficult to separate the wheat from the chaff. 

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