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Baring backs hedge approach for Asia

Baring Asset Management is recommending a hedge fund of funds’ approach to combat volatility in the Asian markets.

It says Asian markets are likely to show a positive return for the rest of this year, with the growth environment remaining solid and concerns subsiding over rising interest rates and inflationary pressures.

But it says the volatility in Asian markets makes investing less straightforward and a fund of hedge funds appealing to investors.

Head of alternative investment Tom Maier says this type of investment brings down the volatility of the market sharply.

He also says a hedge Fof can exploit the pricing anomalies and inefficiencies common in Asian markets using techniques such as long/short equ- ity and event-driven volatility and arbitrage strategies using a range of bond and equity instruments.

Maier says BAM has for a long time had a strategic tilt towards higher growth rates available in the emerging markets of Asia and away from developed Western markets.

The Baring Asia Hedge Select fund aims to capture the upside in rising markets but also preserve capital if markets fall, reducing the volatility of investing in Asia.

Maier says: “Volatility and rapid change of market leadership in Asia means market timing is a key investment decision, which not many can get right. We believe an alternative investment approach offers advantages for investors who recognise the opportunities but are concerned by the volatility of Asian markets.”

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