The Rise of Liquid Alternatives & the Changing Dynamics of Alternative Product Manufacturing and Distribution (Citi)

May 2013

KEYWORDS: arbitrage, assets under management, Consultants, endowments, equity hedge funds, family office, foundations, Fund of Funds, hedge fund investor, Hedge Fund Regulation, Hedge Fund Research, Institutional Investors, pensions, portfolio diversification, portfolios, regulatory requirements, risk management, shadow banking, Sovereign Wealth Funds, Survey, Volatility

Authors:

Citi Prime Finance

Organizations:
  • Citi

Summary:
Institutional investor views about the role hedge funds play in their portfolio continue to evolve. In line with the shift from a capital-based to a risk-aligned allocation approach discussed in our 2012 survey, more interviewees now describe hedge funds as being “shock absorbers” and as offering “insurance” against losses in their portfolio versus being seen primarily as a diversification and risk-adjusted return vehicle. This bodes well for continued growth in industry assets, given participants’ assessment of increased risks in the market environment.

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