How Hedge Funds Became the New Fixed Income Substitute

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Almost overnight, allocators started to swap out fixed income exposure for hedge funds.  What’s driving this?  Two trends:  after large and sudden drawdowns in both 2020 and 2021, many allocators simply want out of traditional fixed income; meanwhile, with alpha back, hedge funds appear to have much better return potential with comparable or lower risk.  Recent oversized drawdowns Let’s start with the first trend.  The difficult reality today is that fixed income investors face paltry expected […]