Hedge funds: Diversification at any price?
Can multi-asset portfolios provide a cheaper and simpler way of seeking risk-adjusted returns than hedge funds?
One of the key drivers of the mass adoption of hedge funds was that they provided a source of uncorrelated returns.
With asset class valuations increasingly stretched, this need to diversify risk has remained as pressing as ever, but the net of fee results from hedge funds in general have been mixed.
In this context, our view is that multi-asset portfolios may provide a cheaper and simpler way of seeking risk-adjusted returns, leaving risk and fee budget for those hedge fund strategies which may genuinely offer uncorrelated returns.