All in the GAIM: Major Themes and Words of Wisdom

CANNES, France (HedgeWorld.com)–As New GAIM 2006 draws to a close, what are the main themes that have emerged from the conference, and the most pertinent comments? Here are just a few?? 1/2

“Institutional investors care about process–they want to look under the hood.”

“Pension funds will continue to rebalance their portfolios in favor of alternative asset classes. However, pension plans have a compliance mindset even when they invest in hedge funds: They will only invest in funds that are registered.”

Still, many pension plans many want to see substantial investment by senior management within the investment product, since they feel this mitigates their own risks substantially.

Pension funds will not generally subscribe to the idea of long lockups, since they make rebalancing difficult and hamper liquidity needs. They also like to know how managers are invested at any particular point in time, especially if these are placing substantial bets. Moreover, they prefer to avoid excessive leverage.

“People should be looking at non-correlated asset classes to take some risk off the table or to enhance returns. If everyone is just chasing returns this could become a problem.”

There is still some terminology-defining that needs to be done when it comes to alpha, as with opportunities for positive alpha, which are not the same across all asset classes.

“Alpha cannot be replicated; otherwise, it is not alpha!”

“New alpha continues to be created in the hedge fund industry. There is still a lot of alpha to be discovered.”