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FERI Alternatives Update - Sustainability as a Source of Return for Hedge Funds

Bad Homburg, 08/27/2020
by FERI
  • Legal regulation opens up new latitudes
  • Hedge funds exploit inefficiencies in regulated markets

Hardly any other asset class has grown as strongly in recent years as hedge funds. The number of funds has almost doubled in the last twelve years, and assets under management worldwide have risen above the EUR 3 trillion threshold for the first time in the course of 2020. Hedge funds are in particular demand among institutional investors looking for high-yield alternative investments in times of low interest rates. Multistrategy and convertible arbitrage funds are particularly popular. These investment strategies were able to achieve high profits precisely because of the distortions in the corona crisis.

Hedge Funds are Prepared

The hedge fund industry expects further growth in the coming years. The tailwind is coming from an unexpected direction: the greater attention being paid by politicians to sustainability guidelines such as ESG (Environmental, Social, Governance), SDG (Social Development Goals) or SRI (Socially Responsible Investments) should give hedge funds an additional boost. Investors are also increasingly expecting alternative investments to take social and environmental issues into account and to pay attention to sustainable corporate management. With the instrument of "short selling", hedge funds have a strong incentive to uncover companies that violate corporate governance or even act fraudulently. As market-independent investments traded off the stock exchange, hedge funds are also more flexible than the investment mainstream. Hedge fund managers can use this flexibility to adapt quickly and adequately to the new sustainability regime. For example, quantitative hedge funds, whose investment decisions are controlled by algorithms, are already able to convert their portfolios at the push of a button so that, for example, ESG criteria and corresponding reporting requirements are met. In addition, hedge fund strategies are very often based on identifying and profitably exploiting inefficiencies in market pricing. Such valuation inefficiencies also arise in the area of sustainability due to the inconsistent and confusing investment criteria. "Price arbitrage is virtually part of the DNA of this asset class. The legal regulation therefore acts as a new source of return for hedge funds," says Marcus Storr, Head of Alternative Investments at FERI.


About FERI

Die FERI Gruppe mit Hauptsitz in Bad Homburg wurde 1987 gegründet und hat sich zu einem der führenden Investmenthäuser im deutschsprachigen Raum entwickelt. Für institutionelle Investoren, Familienvermögen und Stiftungen bietet FERI maßgeschneiderte Lösungen in den Geschäftsfeldern:

Das 2016 gegründete FERI Cognitive Finance Institute agiert innerhalb der FERI Gruppe als strategisches Forschungszentrum und kreative Denkfabrik, mit klarem Fokus auf innovative Analysen und Methodenentwicklung für langfristige Aspekte von Wirtschafts- und Kapitalmarktforschung.

Derzeit betreut FERI zusammen mit MLP ein Vermögen von 39,6 Mrd. Euro, darunter 9 Mrd. Euro Alternative Investments. Die FERI Gruppe unterhält neben dem Hauptsitz in Bad Homburg weitere Büros in Düsseldorf, Hamburg, München, Luxemburg, Wien und Zürich.



Media relations contact

Katja Liese

Member of the Management Board

Corporate Strategy, Marketing and Communications

T +49 (0) 6172 916-3192

F +49 (0) 6172 916-1192

presse@feri.de

FERI AG

Rathausplatz 8-10

D-61348 Bad Homburg

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Katja Liese
Member of the Management Board
Corporate Strategy, Marketing and Communications

T +49 (0) 6172 916-3192
F +49 (0) 6172 916-1192
presse@feri.de

FERI AG
Rathausplatz 8-10
D-61348 Bad Homburg

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Katja Liese
Member of the Management Board
Corporate Strategy, Marketing and Communications

T +49 (0) 6172 916-3192
F +49 (0) 6172 916-1192
presse@feri.de

FERI AG
Rathausplatz 8-10
D-61348 Bad Homburg

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