Peter Clarke, chief executive of Man Investments, was in Hong Kong last week to make the award for the Man Asian Literary Prize (won by Bi Feiyu for Three Sisters). A day later he offered his views on the current condition of hedge fund investing.
He cited a survey of hedge fund investors which found that ‘meeting performance expectations’ and ‘transparency’ were the main investor issues at present, having taken the place of risk management and liquidity, which were the key issues for 2009.
“Performance has come back in other assets, so people expect the same for a hedge fund portfolio,” he said. “People are desperate to get hedge fund performance up.”
AsianInvestor will be thinking about the exact ways in which funds of funds are going to secure that creditable performance in our May edition.
Clarke was referring to a survey of hedge fund investors produced by SEI Knowledge Partnership and Greenwich Associates that asked what the biggest challenges were when dealing with hedge fund managers.
At the bottom of that list were “bad press” and “educating the board”. On that last point, he noted that hedge fund investment can be slowed because of the often protracted period of investment committee deliberation over an individual hedge fund allocation that can extend over several months, as opposed to, say, a decision to keep funds in cash form, which is a fairly instantaneous decision.
One excellent way of overcoming shoddy performance is to time entrances and exits into a market with uncanny precision. However, he is wary of accomplishing this feat.
“Recent events show that trying to time the markets is virtually impossible,” he said. “Don’t dump positions unless you absolutely have to, else you might find it difficult to re-enter the market.”
Insofar as their own fund of hedge fund strategies are concerned, he says that Man Investments is currently overweight in long/short, global macro and managed futures strategies.
Clarke joined Man Investments in 1993 after spells in corporate finance with Morgan Grenfell and Citicorp.