Comparing Hedge Funds to Multi-Asset Funds

Comparing Hedge Funds to Multi-Asset Funds

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Comparing Hedge Funds to Multi-Asset Funds
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Calendar21 十一月 2017

For the last several years, hedge funds and multi-asset funds have made a big impression on the investor landscape. Multi-asset funds are highly liquid, straight-forward to understand, competitive on fees and relatively transparent. They have also delivered solid risk-adjusted returns. Hedge funds are more well-known but the industry has come under criticism in the last few years over its fees and performance. Despite this, hedge fund assets under management recently hit a new high, exceeding US$3 trillion.[1] Here we compare both types of funds, looking at their similarities and differences over a range of attributes.

Governance

One of the reasons why multi-asset funds have gained so much traction over the last few years is due to their relative ease of use. While multi-asset funds are seen by some as a one-stop shop for investors seeking diversification, hedge funds might have 20-30 line items and a mix of different strategies. This presents a headache for an investment committee and makes multi-asset funds easier to oversee.

Transparency

After the global financial crisis, the hedge fund industry was routinely flagged for lack of transparency As a result, some hedge funds now deliver transparency that exceeds traditional fund managers. Others, however, are still playing catch-up. While hedge funds have caught up, multi-asset funds deliver better transparency across the board. Fund managers provide access to portfolio managers and give timely responses to data requests along with accurate and timely reporting.

Value for money

Long-term investors in hedge funds may have experienced very strong risk-adjusted returns. Therefore, we would consider them very good value for money. They have delivered returns while also bringing diversification to the portfolio. Multi-asset funds have also made a mark on this front, delivering solutions at relatively low cost. They are suceeding in blurring the lines and challenging the hedge fund industry, which in response has been forced to bring down their fees. (It’s hard to look solely at performance without considering fund fees.)

 

To learn about the benefits and drawbacks of hedge fund and multi-asset fund investing across all attributes, download the full article.

 

[1] https://www.bloomberg.com/news/articles/2017-01-23/hedge-fund-assets-pass-3-trillion-in-2016-for-first-time-chart

 

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