The popularity of hedge funds is rising among investors. Several studies and reports reveal investors' intentions both in Finland and abroad to increase their alternative investments. One significant reason for the development is the low interest rate, which makes achieving returns at lower risk challenging.
"The strong interest in hedge funds is justified – they offer a good alternative if you’re looking for steady returns with a moderate risk profile," says director Päivi Riutta-Nykvist.
Hedge funds are a natural part of the portfolio of large institutional investors, precisely due to their good diversification features. For small-scale investors, the road to hedge funds is more difficult and more time-consuming, as finding and researching individual funds and meeting their minimum investment requirements make the matter more difficult. A fund of funds offers a ready solution for this.
- The spectrum of hedge fund supply is broad, and it is true that hedge funds are, in many cases, harder to understand than traditional equity or fixed-income funds. Here, choosing the correct, expert and reliable partner is emphasised. "It is worthwhile paying attention to the professional skill, investment process, risk management and longer-term performance of the portfolio manager when selecting a partner," Riutta-Nykvist explains.
The prize-winning FIM Orient Alpha Fund mainly invests in hedge funds investing in the Asian capital markets.
- The still-emerging capital markets of Asia offer more opportunities for finding undervalued or incorrectly priced securities than efficient markets. "This means they create good opportunities for investors to generate returns," Riutta-Nykvist says, justifying the attractiveness of Asia.