PORT VILA, VANUATU / ACCESSWIRE / October 23, 2017 / Investing in hedge funds is one of the most polemical topics in the financial world. While advocates blindly increase stakes, critics turn away from profits, with both choosing not to address issues such as liquidity, transparency, interest, and implementation. Though the two parties have strong views, with many studies backing each claim, ECN processing broker Mira Capital Markets highlights that the potential benefits outweigh the disadvantages.

With six trading platforms and more than 100 products at the disposal of its clients, Mira Markets is well-placed to monitor and analyze industry trends. The company, licensed in Vanuatu, is very familiar with hedge funds because they are among the key participants in forex trading – a principal business area for Mira Markets. According to an expert broker at Mira Markets, hedge funds play a critical role in financial markets as they increase the number of participating investors, broaden the use of smart strategies, and enlarge the pools of capital available. Having started off as a tool for wealthy individuals, they have now evolved into a platform for many institutions and help diversify portfolios, manage risks, and produce reliable returns. Compared to other forms of investments, hedge funds have the freedom to buy into areas where managers believe they can outperform the market and this flexibility not only maximizes opportunities for profits but spurs growth and innovation in services and strategies.

Mira Capital Markets, which also offers investors private money management services, considers one of the key perks of investing in hedge funds their ability to reduce losses by up to 80% during share market sell-offs compared to other forms of investments, where the chances of loss are close to 100%. Another advantage is capital preservation - while traditional fund managers think about risks in terms of performance deviation from a benchmark, hedge fund managers view them as loss of capital. This ensures that they actively try to manage it and limit their losses compared to traditional managers, who will lose as much as the market does. Hedge funds also have innumerous benefits for portfolio construction as it reduces exposure to general market movements and only targets specific risks.

Based on its experience with multiple asset classes, Mira Capital Markets believes this produces a low level of downside volatility compared to other assets and a more consistent return in a diversified portfolio. The broker concludes that investing in carefully chosen hedge funds will result in more attractive risk-adjusted earnings while taking advantage of improved portfolio characteristics, access to new return streams, and a general reduction in the frequency and severity of losses.