At InvestmentEurope’s Frankfurt Forum in October, fund selectors sought managers who can limit or prevent losses near-term, but still prosper when capital markets finally calm.

Delegates at the forum in the Intercontinental Hotel heard from a wide range of speakers representing the gamut of investment strategies.

These ranged from long/short credit and multi-asset real return, to renminbi-hedged bonds and a rates and currency program. More mainstream strategies were also represented, including equity income funds, global/European equities, and emerging market debt.

The day began, however, with a presentation on Ucits hedge funds from Marcus Storr, head of hedge funds at Feri Trust.

He said regulated hedge funds played an increasingly important role in a diversified portfolio, and are often run by managers with extensive experience of unregulated hedge funds.

Added to this advantage is their potential, but not promise, to preserve capital in difficult times such as the present. Regulated hedge funds were down 3.9% by 30 September this year, according to monitors Alix Capital.

The onshore industry now holds about $140bn, according to Alix, and it is often favoured by allocators for its tighter oversight, Storr said.

While acknowledging these advantages, he also highlighted a number of potential pitfalls. Onshore alternative funds have the option to gate up to 10% of assets, he noted, diminishing the benefit many allocators see in more favourable dealing terms, fortnightly at least.

In addition, Storr cautioned Ucits hedge funds using swap structures could suffer if the swaps desk attached to them reacted badly to large withdrawal requests.