Reuters UK – That whole "make money in any market" thing isn’t necessarily working out to the advantage of the hedge fund and private equity industries.
And it’s not just them: a forced deleveraging and potential global recession mean the whole range of alternative investments, including real estate and commodities, are very vulnerable and should do substantially worse than plain vanilla stocks and bonds.
The common denominators are dependence on borrowings and high sensitivity to the overall rate of economic growth. If we have, as now seems more likely, an extended recession combined with a sustained sell-off of assets by highly indebted holders, the suffering in the alternative community will be profound.
"We are going through a massive never-seen-before deleveraging across the financial system which will push us into a total meltdown; we already have a partial meltdown," said Jan Loeys, head of global asset allocation at JP Morgan Securities in London.
