Investing in private partnership structures such as hedge funds, private equity and private real estate can be a fruitful and exciting endeavor, especially when venturing into asset classes that lack competition and efficiency. An important qualification to remember when beginning due diligence on a partnership is that no investment is perfect. Each one has its own risks, however esoteric or idiosyncratic, and risks change over time, as do the operations and other intricacies of investment management.
Wall Street research has always been a bit of an enigma to many financial industry participants. On the one hand, anything produced by a sell-side firm is ultimately conflicted by the very business of the firm publishing it.
The past year could be characterized as a year in which the unexpected happened, with perhaps the Brexit result and Donald Trump’s triumph in the U.S. presidential election the pinnacle of a series of unpredicted events. As markets struggled to respond to these surprising outcomes, volatility increased and hedge funds, following two years of returns below 5%, were able to capture some upside, adding 7.4% during the course of 2016.
After seven years of a consistent flow of new regulations, the trading world is not looking for more regulatory change, but a review of what is working and relief from what has gone too far — basically, a smarter approach.