Investing in Hedge Funds: All About Returns? (Preqin)

June 2014

KEYWORDS: Hedge Fund Performance, Institutional Investors, S&P 500, benchmark, portfolio diversification, risk management, Volatility, Liquidity, strategy, alternative investment, return assumptions

Authors:

Preqin

Organizations:
  • Preqin

Summary:
In this report we examine why investors are allocating their capital to hedge funds, what they seek from the funds they invest in and how they assess the success of their portfolio. With much of the criticism hedge funds have faced over recent years focusing on their relative performance to S&P 500, we look at how funds have actually performed and met investors’ return expectations for risk-adjusted returns in all market conditions, as well as taking a closer look at why S&P 500 is becoming a less relevant benchmark for the industry. Central to our examination is an understanding that the hedge fund industry is not monolithic, but populated by a diversity of strategies with differing investment goals and return assumptions. This premise is often ignored or not understood by critics of hedge fund performance.

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