A recent press article said that with major risk assets looking "fully valued," it was time to seek out alternative investments such as hedge funds. But those thinking of making that shift might want to look before they leap.
According to consulting firm McKinsey and Co, hedge funds and other "alternative" investments will command up to 40% of the asset management industry’s global revenues by 2020 as investors seek them for "safety and consistent returns."
Certainly, some recent trends might appear to point in that direction. According to Hedge Fund Research, investors allocated $30.5 billion of new capital to the industry in the second quarter of this year, the most since early 2011.
Cited by researchers as driving the flows are the imminent end of the US Federal Reserve’s stimulus, escalating geopolitical tensions, a rise in mergers and acquisitions, and the belief that conventional asset valuations are "extended."