Hedge funds will emerge as an important component of investment portfolios this year, according to two multi-managers.
While hedge fund managers faced a challenging environment last year, the market would now provide good opportunities for these managers, according to ipac and Advance.
"Last year was rather challenging for hedge fund managers. This year, however, I am optimistic hedge fund mangers like active managers will be in a good position to take advantage of the market," ipac chief investment officer Jeff Rogers said.
In particular, hedge fund managers would be able to benefit from market mispricing, Advance Investment Solutions head Patrick Farrell said.
"In 2010 there will be plenty of opportunities for active management as the price dispersion between high-value assets and low-value assets blows out," Farrell said.
"This is an active manager's dream and can really add value to a portfolio. Similarly, hedge fund managers are like active managers, given their ability to pick opportunities."
Hedge fund managers, however, did face challenges, Rogers and Farrell said.
"Hedge fund managers now face increasing regulation which requires them to have more liquidity and transparency. This will affect the way they conduct their business," Farrell said.
High fees remained an issue for the sector, Rogers said.
"Hedge fund managers, particularly the managers that run fund-of-fund structures, take high fees. Clients are often concerned whether the value add that comes from these high fees is more of a benefit to the manager than the client," he said.
