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Hedge funds are failing investors, claims Geffen

Neptune founder Robin Geffen says he can see the attractions for firms to run hedge funds because of the high fees they can charge but performance for investors has been poor.

At the Morningstar 2008 conference in London last week, Geffen said: “I think the lesson we have learnt so far this year is that a lot of people who thought that returns go up as the market goes down have found out that is not the case.”

Geffen said Neptune has decided not to move into the 130/30 market but that decision may change if demand from customers rises.

He said: “We are a consumer-based organisation and if people want 130/30 funds then we can deliver that as we feel that we have a system that not only shows us the most attractive stocks but also the most unattractive ones.”

Chelsea Financial Services managing director Darius McDermott says: “I can understand Robin’s argument as all hedge fund managers earn decent money. I think it makes sense to have performance fees as they allow the good fund managers to make more money. I just think that many performance fees are too high.

“As for 130/30 funds, they have their place but not all firms need them to stand out. For example, Neptune is doing just fine at present and is arguably the best-perfor-ming fund firm in the past 12 months.”

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