The fall in rates since the financial crisis has benefited stocks and other long-duration assets while hurting short-duration assets such as hedge funds, says GMO’s Ben Inker. “The characteristics that made hedge funds disappoint,” he says, “may well prove a blessing if discount rates start to rise.”

Inker argues that today’s high returns and advanced U.S. equity valuations are not sustainable because they “represent an increase in the present value of an asset without any increase to the cash flows to the asset class.” So while the present values have risen, he says, future values have not. He contends that today’s low return, low-rate environment may render hedge fund investing to be the best course.

Inker says that the additional complexity and higher fees associated with hedge funds may well be worth it: “Their generally disappointing performance over recent years, rather than a sign to dump them once and for all, should probably be recognized as a signal of their potential utility in the market environment we face in the coming years.”