UK - Pooled fund of hedge funds made gains for the third consecutive quarter - but performed less well over the longer term when compared with UK equity pooled funds and property pooled portfolios, according to new statistics.
During the second quarter of 2007, BNY Mellon Asset Servicing said pooled fund of hedge managers achieved a median return of 4.6%, net of fees.
Meanwhile, over the quarter the firm said pooled fund of hedge managers outperformed UK equity, property, and UK bond pooled fund managers who provided returns of 3.8%, 1.8% and -2.4% respectively.
Despite this, the results showed that in the longer term, pooled fund of hedge fund managers fared less well.
Over three years to 30 June 2007, the median return for pooled fund of hedge funds was 9.8% p.a. compared with 18.2% p.a. for UK equity pooled fund managers. During the same period BNY Mellon Asset Servicing said the median standard deviation for UK equity funds was 6.2% p.a. compared with 4.8% p.a. for pooled fund of hedge funds.
Commenting on the results, Daniel Hall, publications and statistics manager at BNY Mellon Asset Servicing, said: “The median standard deviation, which measures the volatility of returns, indicates that UK equity managers achieved this out performance by incurring a slightly higher level of risk than fund of hedge fund managers.”
Pooled fund of hedge fund managers also failed to outperform property pooled funds, which returned 16.3% p.a.
The group did however outperform against UK bond managers who returned 4% p.a. over three years to 30 June 2007.
Discussing the implications of the results, Chris Erwin, investment principal at Aon Consulting, said that the fact pooled fund of hedge funds outperformed UK equities during the third quarter, proved they had done their job by reducing volatility.
Erwin said fund of hedge funds were designed to take a cautious approach and this is what made them attractive compared to other asset classes.
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