Imogen Dillon-Hatcher, FTSE Group EMEA

Pension funds generally invest in hedge funds because of the perceived diversification benefits of the asset class.

However, some financial experts believe many funds tend to be highly correlated to the market they invest in, therefore serving as mere providers of beta rather than alpha - albeit at a higher cost level than passive investment products.

With a long-term investment horizon, pension funds tend to prefer lower-cost products.

This explains the popularity of index-linked products.

The real

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