Gareth Henry Enlightens Investors About Hedge Funds and Traditional Equity/ Bond Investments
Gareth Henry, having helped a number of managers build awareness about their product or brand, is no strangers to alternative assets. Operating as the former head of investor relations for the well-known investment group Fortress Investments, he has spent a sufficient amount of time learning how sophisticated investors think about equity, bond, and hedge fund investments. For new investors, the differences between traditional equity /bonds and hedge funds can be daunting; luckily, Gareth Henry has broken all the complexities down for investors. Follow Gareth Henry on medium.com
A Word About Hedge Funds
In recent years, Gareth Henry has seen hedge funds run into some trouble in matching the rising performance of stocks, having a peculiar ability to go short and outperform the market in troubled times. This ability has enabled them to retain their popularity amongst savvy investors who know the value having a portion of their portfolio dedicated to financial instruments that perform well when the market has taken a downturn. Another benefit of investing in hedge funds is the fact that they offer unparalleled diversification not significantly correlated to fixed income or long-only investments. Incorporating long/short strategies gives these types of investments the ability to exhibit unmatched performance in a variety of market situations.
Unfortunately, according to Gareth Henry, one of the downsides to these types of investments is the higher fees charged to investors when compared to traditional equity or bond investments. Higher fees mean hedge fund managers must deliver a better than average rate of return.
For long-term investments, equities have frequently outperformed other investments like bonds, or cash equivalents like money market funds and savings accounts. Having historically performed well in these situations means investors looking at long-term returns have usually allocated a percentage of their investments to stocks. Investors relying on equity investments for growth should always take into consideration how short-term dives in the stock market can affect their ability to achieve their financial objectives. Despite short-term dives, traditional equity investments have exhibited superior long-term growth when compared to other investments like bonds and cash. With Mutual Funds and ETF’s, it’s easy for investors to diversify their amount of equity exposure.
Gareth Henry believes that in order for investors to profit in both short and long-term investments, they must diversify their financial portfolios to include both traditional equity and bond investments as well as hedge funds.