IFAs are predicting a boom in the hedge fund market over the next 12 months, according to quarterly IFA research commissioned by Axa.
The research, by public relations firm Citigate Dewe Rogerson, found that 60 per cent of IFAs believe hedge funds will increase over the next year.
Half of IFAs questioned believe the increase in interest is due to consumers being better informed while 30 per cent of IFAs attribute the increase to market volatility. The survey also found that a quarter of IFAs think investors have become more sophisticated.
However, 58 per cent say that hedge funds are difficult for clients to understand and 26 per cent say that the products' reputation of high risk deters clients.
The research was carried out among 100 IFAs between August 12 and 16.
Axa offshore investment marketing manager Christine Hall says: “For hedge funds to become more widely used as a mainstream investment vehicle, the industry must overcome the high-risk reputation that hedge funds still have among certain retail investors. The reality is that many hedge funds have highly risk-averse investment strategies.”
Hargreaves Lansdown senior analyst Meera Patel says: “Hedge funds can be a good tool for a diversified portfolio. Consumers may be more aware of hedge funds but in the current conditions, they are reluctant to learn about a new investment.”