Exotic Hedge Fund Strategies
Hedge Fund Investors Turn to More Exotic StrategiesThe Gaim hedge fund conference in Monaco is always a great opportunity to talk to and hear from top investors and hedge fund managers in the industry. Reuters reports how investors are increasingly turning to exotic strategies outside the mainstream to achieve returns in this volatile market. These strategies range from less than typical to funds betting on Chinese companies under fraud probes.
How exotic? How about portfolios betting on Chinese companies embroiled in fraud probes? Or funds looking to arbitrage prices in the electricity market?
At this week's GAIM hedge fund conference in Monaco, investors were shaking their heads about where to generate returns, with many viewing so-called safe havens such as German Bunds and U.S. Treasuries as overvalued while equities look too volatile.
No surprise then that funds trading in niche areas, where profits are less to do with general market trends and more a manager's skill, are on investors' radar.
One hedge fund investor at the conference said he had achieved double-digit returns from investing in a range of more esoteric funds, such as those involved in electricity arbitrage, where a manager tries to profit from fluctuating prices by buying and selling electricity, and those trading the volatility of option prices.
He said the outlook for returns was "very unattractive to us in the mainstream strategies: long-short equity, event-driven, distressed, credit, CTA (commodity trading advisor), global macro", seeking instead less popular areas. Source