The violent intra-day market volatility seen in the past two weeks has caused widespread panic and has undoubtedly seen many investors making irrational and emotionally-driven decisions. These decisions are often sub-optimal and result in the destruction of wealth for the investor. It is times like these when hedge funds can prove their worth by protecting investors against the full extent of the losses experienced by their long-only counterparts. The relative flexibility of hedge fund strategies also allows them to capitalise on the opportunities brought about by these extreme market movements and the conversations we’ve had with hedge fund managers in the last few days certainly speak to the resilience of these products in volatile times. Paul Wiseman, Senior Investment Analyst with Maitland in London, explains why hedge funds still very much have a place in investment portfolios – and even more so in the light of recent events. (more…)
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