Exposure to hedge funds conditional on the interest rate environment can make a difference to your portfolio returns. See the UBS paper, "Hedge fund performance in the context of the
current market & macroeconomic environment".
Yields are not a drag but can represent a tailwind for hedge fund investing. The upward slope is slight but coming out of the zero-rate environment may increase return opportunities. There is the view that high interest rates will mean that investors should switch to the safe asset, yet the evidence suggests that absolute and relative returns are higher when overall yields are higher. This is not the time to switch to cash.
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