Evaluating Hedge Funds in a Low-Growth and Low-Yield Environment (J.P. Morgan Asset Management)

February 2013

KEYWORDS: hedge funds, Hedge Fund Performance, Institutional Investors, transparency, risk management, Hedge Fund Regulation, correlation risk, strategy, Liquidity, alternative investment, pensions, Hedge Fund Research, portfolio diversification, interest rate spreads, Hedge Fund Managers, multi-strategy funds, reinsurance, Emerging Markets, Macro


J.P. Morgan Asset Management

  • J.P. Morgan Asset Management

Increasingly, investors are seeking to justify how hedge funds can “earn their place in a portfolio” in a low-growth, low interest-rate environment. While it’s true that hedge funds have faced challenges, we believe they have earned—and will continue to earn—their role in portfolios. Among the primary reasons: hedge fund strategies and risk profiles have become increasingly diverse amid an evolution in hedge fund categorization. Hedge funds can no longer be generalized. This paper examines how this industry has been redefined, analyzes the recent and long-term performance for hedge funds, considers the case for hedge funds based on the current market environment, and details our outlook for certain high-conviction hedge fund strategies.

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