InvestorQ : Why hedge funds are favorites for pension funds?
Purvesh made post

Why hedge funds are favorites for pension funds?

simran Kaur answered.
2 years ago

Hedge funds provide unique risk and return opportunities, both as stand-alone investments and as diversifiers, in traditional stock and bond portfolios. For a long time, pension funds have been allocating an increasing amount of their assets to alternative investments, such as hedge funds and funds of hedge funds (a basket of hedge funds) to diversify their portfolios.

Hedge funds provide flexibility to move in and out of markets, making them a suitable alternative asset class for many investors. Unlike their mutual fund counterparts, hedge fund managers focus on absolute returns and their ultimate goal is to profit in all types of market environments.

Alternative investments such as hedge funds (and funds of hedge funds) can be profitable in both up and down markets, but their most important feature is their non-sensitivity to the globalization of stock and bond portfolios.