The hedge fund industry has witnessed strong growth over recent times with many billions of pounds now under management. They have been able to demonstrate superior annual returns when compared to funds investing in the traditional asset classes and with reduced volatility.
Hedge fund managers focus on absolute returns rather than benchmarking themselves against the performance of, for example, an equity market. To achieve this objective, investment strategies are pursued utilising superior information, greater flexibility in the choice of investment vehicles or better market access in order to provide an edge.
They seek to control market risk by using strategies, such as leverage and short sales, which are not available to the traditional mutual fund manager. The flexible nature of hedge funds enables the manager to use the full range of their skills.
Hedge funds can add to portfolio diversification because of the low correlation to traditional investment markets whilst adding some protection for investors in falling markets by pursuing strategies to manage the downside risk of the portfolio.
Investment means that your capital is at risk and the value of investments can fall, therefore you may get back less than you invested.Past performance is no guide to future performance. There is no guarantee that the tax efficient nature of any investment will remain.
Your capital is at risk and the value of investments can fall, therefore you may get back less than you invested.