Pensions and endowments place a much higher precedence on defending assets rather than simply aiming for ridiculous returns while taking extraordinary risks to do so. It should be taken into consideration that resilience and persistence on the trading industry is the foremost and formidable tool traders should naturally have to minimise risks and deliver returns.

The drawback however in such reduction in terms of motivation in goals cannot answer for the decrease in key global interest rates, the standards to which traders link their expectations. With the low trading output along with increase correlation between assets and the perils of an unstable market are pulling down returns. What actually matters most to institutions is that the return in their profit is steady.

Some companies have increasingly grown transparent regarding their cutbacks in their risk taking precautions. One of Britain’s hedge fund firms, Winton Capital Management made clear to its patrons that the growth in their assets under its watchful management has been due to the fact that there had been a reduced use of leverage trading algorithms with more careful risk-taking measures. Moreover, the above mentioned firm plans on actually panning out their investments in terms of decades rather than months or years.

Larger hedge funds still control the market with the top 20 hedge funds able to manage more than 25 % of the industry’s £2,000 return in assets. What’s more is that many are apprehensive that institutional investors are just focusing more on the manner how returns are produced and how it profoundly has damaging effects on the levels of those returns.

With more money flowing in, the tendency is that smaller profits and less exciting trading is no longer considered short-term but secular instead. The pressure coming from investors to focus more on liquidity or the speed with which they can draw their money could be a cause for concern.

Finally, it’s not like hedge funds are going anywhere. So think of the situation that the one managing funds he/she can complain all day long and how difficult how it could be or be optimistic by looking at the brighter side that hedging is still the best way to make money.

Last Updated: September 10th, 2012