Private wealth hedge fund investors 'at risk'

There are ’serious concerns’ over the ability of those using their private wealth to invest in hedge funds to make the correct allocation decisions.

This is the conclusion of new research from the European School of Management and Technology (ESMT), which has been produced ahead of the anticipated increase in regulation that is expected to be applied in the hedge fund industry in the near future.

According to the findings, investors often ’naively chase performance at all costs’ and disregard the risks associated with different styles of assigning their personal wealth.

In addition, they are often unable to move between techniques at the right time, which ’exposes them to unforeseen risk’.

’The fact that investors appear unable to recognise the risks of different styles and chase performance at all costs could leave them vulnerable and unprotected,’ warned assistant professor for the ESMT and research author Guillermo Baquero.

He added it is crucial new regulation is introduced to protect investors as soon as possible.

Recent research from imTabs Investment Research and BarclayHedge showed $16.6 billion (£11.3 billion) of new funding was taken in by hedge funds during February.ADNFCR-2318-ID-19815922-ADNFCR