Reuters – Hedge funds are cooking up new strategies in the loans, oil derivatives and agricultural futures markets to satisfy investor appetite for higher returns, PSolve Alternative Investments toldReuters.
An excessive number of players in traditional markets such as stocks and bonds have reduced average industry returns in recent years, and because of that, hedge funds are reinventing themselves, said Soondra Appavoo, managing director of the fund management firm.
“Hedge funds have barely scratched the surface of global financial assets … They can trade anything … As long as you’ve got the right guys in the right strategies in the right spaces, they will make money,” he said.
“The doomsayers who are talking about falling hedge fund returns have a blinkered view of what the industry can do.”
Hedge fund returns last year averaged around 7.5 percent, compared with around 9.5 percent in 2004 and more than 15 percent in 2003, according to industry estimates.
Part of the problem has been the strong growth of assets — estimated at more than $1 trillion (570 billion pounds) now compared with $500 billion in 2000. The number of managers too has more than doubled to between 8,000 and 10,000.
