Hedge funds are back and bigger than ever before. And now a growing category sits atop the industry: multistrategy funds.
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Investor flows often happen at the wrong times coming out and the wrong times coming in, said Sarah Samuels, CIO and partner at consultant NEPC. But for those that had the fortitude to keep going with hedge funds even after some years of underperformance relative to fully invested markets, there have been some strong returns in recent years.
“We have a pretty high bar for hedge funds to make their way into a portfolio,” Samuels said. “We are very supportive of the right ones, and the way that we think about it is: Do you provide something unique in terms of a unique return stream that you can’t get elsewhere in the public markets, like a unique alpha stream? Is it a diversifier, or is it a return enhancer? And we’re looking for a certain bogey of how much of the alpha goes to the manager versus how much does the investor keep?”
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