Credit Suisse noted that many hedge fund investors found themselves exposed to unexpected risks in 2008, due to lack of transparency.
In the wake of current investor sentiment, replication strategies are gaining in popularity for their ability to provide similar risk/return characteristics to a well-diversified portfolio of hedge funds, while avoiding certain drawbacks of hedge fund investing such as illiquidity, lack of transparency and headline risk, said Jordan Drachman, head of research for alternative beta strategies at Credit Suisse.
We are currently seeing increased interest in the global macro sector, as the strategy has a history of producing positive performance during market downturns and has been the top-performing hedge fund sector since the inception of the Credit Suisse/Tremont Hedge Fund Index in 1994, Drachman added.
