Going forward every investment strategy will look more like a hedge fund of 10 years ago, says Barry Allan, a founding partner at Marret Asset Management. In the ‘Allocating to Alternative Strategies to Improve Portfolio Performance’ session at Alternative IQ’s ‘Showcasing Canada’s Award Winning Hedge Funds’ event, he said looking broadly at how hedge strategies have evolved over the past 15 years, it is not that hedge funds have lost ground, it is that long strategies have become more hedge-like. Long only strategies have become more long-short and the average mutual fund has more hedging tools in it that it ever had. Brian D’Costa, founder and president of Algonquin Capital, said one of the issues with hedge funds is there is an awkward fixation with size. Hedge fund managers become millionaires by growing the size of their fund so there is a motivation to get bigger, to reach institutional size. However, many strategies that generate returns are not institutional size and some strategies are no longer viable as they get bigger. Jason Landau, a portfolio manager at Waratah Capital Advisors, said there is always a place in portfolios for strategies which deliver alpha. As well, if there is a pullback in equities, investors will again value hedge funds. And, he noted, it has been nearly 10 years since the last downturn in 2008.
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