Balancing Risk with Hedge Funds?

September 11, 2013 ( – New research says institutions are looking to hedge funds for risk management and diversification.

This month’s issue of  The Cerulli Edge-U.S. Asset Management Edition examines how asset managers balance risk and provides a close look at requests for proposals (RFPs) and database teams, exchange-traded funds (ETFs) and alternative investments.

“Asset managers have refined their approach to asset allocation over the past several years to emphasize risk-based approaches,” said Michele Giuditta, associate director at Cerulli, the Boston-based global analytics firm.“Using a risk-based lens, managers aim to adjust their portfolios to offset periods of extreme volatility and market stress that may affect both equity- and credit-related investments in the same ways.”

More recently, asset managers have experienced demand for a range of hedge fund strategies—credit-related, global macro and event-driven ones in particular. The research indicates that demand for these products should continue in the near term, given the low interest rate environment, ongoing global financial uncertainty, and steady merger and acquisition activity.