View more on these topics

Two sides split on investment levels

Advisers and providers have clashed over what level of diversification a client’s portfolio should have to hedge fundsSome advisers at the round table meeting said that 5-10 per cent is a fair amount of exposure, given the number of questions over performance, cost and transparency, while providers say having such a minimal amount is not efficient and will fail to show a hedge fund’s usefulness as a true diversifier.

IFG financial planning strategist Donna Bradshaw said most IFAs would be overzealous to place more than 10 per cent into a portfolio given their lack of education on the subject.

She said: “To commit 20 per cent is difficult and, more to the point, unrealistic, as a typical IFA, who does not have a wide-ranging knowledge of hedge funds , would struggle to get a client to place that much trust in an asset class that still lacks a long-term track record.”

But HSBC alternative investments CEO Barbara Rupf Bee said that would only scratch the surface of what hedge funds can offer.

She said: “An exposure of at least 10 per cent is needed to access their true value as a diversifier. Having 5 per cent in hedge funds proves nothing. You need the impact of the diversifier in order for it to be precisely that. It is all a question of education.”

New Star director Ravi Anand says: “IFAs do need to recognise what their skillset is but by the same premise, they have to pay close attention to what the client wants above all else. Surely, having a maximum of 5 per cent in hedge funds across cautious, balanced and aggressive funds makes no sense.”

BestInvest head of communications Justin Modray says: “If we could trust them completely, we could invest 100 per cent in hedge funds. It may take a two or three-year market downturn for the full benefit of hedge funds to come through.”

Recommended

Adviser Fund Index

Last year, every fund in the UK corporate bond sector underperformed cash and only eight out of 95 funds delivered positive returns.Interest rates have an inverse relationship with bond prices so the rise in UK rates has caused the price of British corporate and government bonds to fall. The total return and capital appreciation of […]

The last chance saloon

What does the future hold for IFAs then? If the imminent retail distribution review does not pose a definite threat to independent financial advisers as such, it may well pose a threat to the term “IFA” itself, some might say.

Brown plans to open up jobs on bank base rate committee

Chancellor Gordon Brown plans to make Bank of England monetary policy committee appointments more transparent by advertising the positions of the four external members when they become vacant.Speaking for the last time as Chancellor in front of the Treasury select committee last week, Brown said in future a timetable will be published for replacing external […]

Managing customers in drawdown

By Lorna Blyth, Investment Marketing Manager Delivering a decent drawdown review process takes time and resources. This article looks at how you can manage drawdown clients in a more cost-effective way. Most advisers are seeing an increase in drawdown clients following pension freedoms. Often these are clients with lower fund sizes, which means advisers are […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com