EUROPE - Experts have warned the market's failure to correctly price hedge funds (HF) remains a systemic problem which needs to be addressed as markets decline further.
Christian Nistler, responsible for the investment strategy of the Syngenta pension funds, told delegates at an industry conference in Frankfurt today the high fee structure of hedge funds in the downward moving market is a problem.
"So far, 2008 has been the worst year for hedge funds, they are down 11.6% year to date, with September being the worst month ever," he said.
Nistler noted the fee structure is not always relative to performance - an issue Torsten Koepke, practice leader for investment consulting at Watson Wyatt Heissman, also commented on.
Koepke suggested for the investment to remain attractive, the pricing and cost issues have to be overcome.
"The market's failure to correctly price skills is a systematic problem," he said, and questioned whether this situation will unwind once aggregate returns decline.
Christophe Chrun, senior portfolio manager within Dexia AM's multi-management business, is adamant the fee structure is valid and instead claimed investors need to be prepared to pay more for the value they get in return.
Chrun described hedge fund investments as a pure diversification method for pension funds, though added investors will need to take extra care at present as he anticipates there will be further deleveraging.
If you have any comments you would like to add to this or any other story, contact Carolyn Bandel on +44 (0)20 7261 4622 or email carolyn.bandel@ipe.com
No comments yet