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‘Don’t settle for 10% returns’

New Star director Ravi Anand believes an increasing demand for institutional-style benchmarks in the retail market has put some investors off hedge funds as the industry looks for what is traditionally seen as the safer option.

Anand said most IFAs now see a 10 per cent annual return as excellent even though other funds with differing mandates may offer much better returns.

He said: “Institutions are being given money and are being told that such and such wants a return of Libor plus four or five. Some hedge funds can offer as much as a 20 per cent return per annum but that is overlooked because of the perceived risk. It seems that the industry is happier with bigger funds offering lower returns but to me that is not that attractive.”

IFG financial planning strategist Donna Bradshaw disagreed, claiming that the additional upside is shrouded by the potential risks that come in tow.

She said: “It is a normal perception that higher return means higher risk. If I am to be given that choice, I would choose to stay with what I know more about – equities – where there is plenty of excellent managers with good, long-term records.

HSBC alternative investment CEO Barbara Rupf Bee said: “If you look at the traditional institution it often takes them 12 to 18 months to make profit, while there is also the question of just how much of the pot of money it is they actually control. High-net-worth clients still dominate the picture and the focus remains purely on returns as opposed to risk-adjusted ones.”


Supporting role

Advisory process – How IFAs look after their clients from point to sale to following a claim can make all the difference in a time of need, says LV= head of intermediary marketing strategy Justin Harper.

Threshold too low for performance charging

Investment managers say it is the fact that relatively low outperformance can trigger big performance-related fees which make some hedge funds more expensive as most other charges are only slightly higher than long-only funds.Most managers at Money Marketing’s hedge fund round table meeting acknowledged that hedge funds were slightly pricier than traditional funds but say […]

The wider review

Aegon UK head of business regulation Steven Cameron says the FSA’s retail distribution review reaches further than the issue of adviser remuneration and outlines how he hopes it will bring about positive change in the industry.

Bupa sells hospitals for £1.44bn

Bupa announced today it will sell its 25 UK hospitals to European private equity firm Cinven for £1.44bn.The health insurance and life provider says the sale will not affect its policyholders who will have access to the same range of hospitals they do now.Bupa chief executive Val Gooding says: “The separation of our hospitals from […]

India correction: a terrific entry point?

By Kunal Desai, head of Indian Equities, Neptune A key concern for investors who were looking at India afresh has been the rich valuations and strong prior performance. We view the correction in the market through short-term growth concerns from demonetisation as a terrific entry point for the long-term investor. Investors should not be overly concerned […]


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