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Swip says disastrous year for hedge funds poses opportunity

Swip’s multi-manager team is confident that the hedge fund holdings in its diversity fund will perform well after a disastrous year for the asset class.

The firm says 2008 was the worst-ever year for hedge funds due to the collapse of Lehman Brothers and the Madoff hedge fund fraud. Share prices of hedge funds were driven down amid concerns about liquid-ity as sterling fell against the dollar.

Head of multi-manager Mark Harries says nobody expects this year to be a good year for hedge funds and this signals a money-making opportunity.

Harries points out the listed hedge funds of funds in which Swip invests have discount flaw mechanisms designed to prevent them trading on huge discounts. These mechanisms have started to trigger, leading to potential profits if the funds are wound up.

He says “Opportunities are almost certain and that is assuming investment performance is flat. The average investor is not going to stay on discounts of around 25 per cent. They are going to wind up the trust to make a profit.”

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