Hedge funds are planning an array of new strategies to continue to provide higher returns for investors, according to fund manager PSolve Alternative Investments.
The fund manager said that funds are being forced to devise new ways of generating money because of investor demands for higher returns and are turning to the loans, oil derivatives and agricultural futures markets as a result.
Hedge funds are looking away from traditional markets, such as stocks and bonds, due to the growing number of players diluting investment returns in recent years.
“Hedge funds have barely scratched the surface of global financial assets … They can trade anything … As long as you’ve got the right guys in the right strategies in the right spaces, they will make money,” said Soondra Appavoo, managing director PSolve Alternative Investments.
The fund management company has launched a new fund of hedge funds, PSolve Niche Opportunities, on the London Stock Exchange (LSE), which will be used to invest in new strategies and smaller concerns.
Hedge funds returned an average of 7.5% in 2005, down slightly from 9.5% the previous year, but analysts claim that the fall in returns has been countered by strong growth in assets to more than $1 trillion this year.