They may need to turn to hedge funds and other alternative strategies to get their required rates of return, which is setting up to be an attractive situation for hedge funds over the same period,” Wolf said. “For investors with a 60/40 portfolio, it will be difficult to assess the equity and fixed-income markets over the next couple of years. “Our view is that private equity and private credit can be considered distinct asset classes but that hedge funds overall consist of a set of underlying trading strategies that we at abrdn broadly categorize as macro, credit, event-driven and equity-hedge,” said Darren Wolf, CFA, senior investment manager and global head of investments for alternative investment strategies at abrdn.Ī number of these hedge fund strategies can perform well in challenging markets because of their flexibility in taking advantage of pockets of opportunity across the short and long term, and their ability to cover diverse nontraditional strategies. Hedge funds and alternative risk premia are defined as strategies rather than asset classes since their risk profiles and return potential shift in response to economic pressures and overall market dynamics. Relative to traditional assets, alternatives - such as hedge funds, private equity, private credit, venture real estate and alternative risk premia - cover a broad spectrum of investments that provide additional diversification.
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