Hedge Funds Back on Top of Asset Class Demand

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UNPRECEDENTED MARKETS SPARK HEDGE FUND APPEAL.

Hedge funds are spiraling higher in demand amid the extent of today’s turbulence across U.S. and global markets.  According to Credit Suisse, net demand for Hedge Funds is at 32 percent — the highest it has been in five years.  Joseph Gasparro at Credit Suisse states that “given manager performance and the wider return dispersion we’re seeing, this is an environment where hedge funds can shine and separate themselves from the pack.”  Other asset classes like private equity, they say, will not make the cut for the latter half of 2020.  Hedge funds are outanking these asset classes which usually tend to rank higher.  Consequently, hedge funds will be a leading force in navigating the market until there is more certainty.  As the Covid-19 Pandemic continues to destabilize the economy, investors will likely move to hedge funds at a greater rate than private equity and venture capital in the short term.  

Approximately 65 percent of investors stated that their hedge fund investments met or exceeded their expected returns for May.  Additionally, North America’s demand for hedge funds is hovering at 30 percent — an all time high.  More data shows that 56 percent of respondents will continue to stick with the industry.  Around 92 percent will invest in other hedge funds.  Investors are looking to capitalize on credit and equity to keep up with the strength of bonds and loans.  Markedly, these data spotlight the demand for hedge funds in the current market.  Fundamentally, this could be an indicator of the end of one of the largest bull markets in history.  Ultimately, there is no way of telling what the future holds with the current volatility of the economy.

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