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This report aims to address two main questions: Why should investors want to allocate to alternative investments like hedge funds? And how best should they go about it? The body of the report focuses on the thoughts and comments on these questions from a leading group of investors and their close advisors who we gathered together for an afternoon in late November at the Renaissance Hotel in St Pancras, London, to discuss and debate.
There is indeed a lot to debate on what investors are looking for from hedge funds – given not least the diversity of new products and regulations being introduced. We decided there were certain core issues such an event ought to address, including: Why bother with hedge funds at all? Where to go for advice on how best to invest? What sort of structures to invest through? How much to pay in the way of fees? And how best to conduct due diligence and select managers successfully?
To address the questions we were delighted to be able to assemble such a diverse group of participants, including people involved with end-investors like endowments and family offices; investment consultants – who have become such important gatekeepers for institutional allocators like pension funds – plus at least one person who advises pension fund trustees; and from groups who run funds of hedge funds (FoHFs), in times previous times very much the dominant allocation route into hedge funds and still a very important source of capital for many managers.
To make an event work, we also needed input from the asset management side of the fence – from firms who wanted to engage with investors and hear from them on their issues, with no holds barred. We were delighted to find two such firms – in Old Mutual Global Investors and Amundi Asset Management – with the vision and far-sightedness to back such a project and make it possible, for which we give them both many thanks. We hope you find this resulting report illuminating and useful.