The performance of hedge funds remains misunderstood

Date: 27 May 2015

Citywealth

Ian Morley, Chairman of Wentworth Hall Consultancy, a boutique alternative investment manager consultant, says hedge funds are not about beating equity indices but about making less in bull markets and losing less in bear markets.

There hasn’t been much media buzz about hedge funds lately – what’s the reason?

That’s a relief. Most press comment on hedge funds is negative. In mildly bullish markets hedge funds tend to match or slightly underperform, usually with lower volatility. It is only when markets get carried away on hubris that the hedge funds going the opposite way get noticed and commented on.

What further comments do you wish to do on this topic?

The performance of hedge funds remains misunderstood. They are not about beating equity indices. They are about making less in bull markets, with lower volatility than the markets and losing less in bear markets.

Who are the most successful investors and what makes them successful?

The ones that combine thorough due diligence with a good sense of gut feel. Probably the mid-size family offices combine these two elements best. They understand risk and when to take it to make money.