Sat, Nov 28, 2015
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

But what is real absolute return? Buyers beware, says Ineichen

Tuesday, December 14, 2010

Benedicte Gravrand, Opalesque Geneva:

The term “absolute return” has been used a lot lately – some say overused. It normally denotes hedge funds’ investment philosophy, but the long-only fund world employs it whenever some hedging technique is used. On the other hand, some find that “absolute return” rings better than “hedge fund” to some investors’ ears.

“Absolute return, in my mind, is an investment philosophy. Its main attribute is active risk management,” explained Alexander Ineichen, founder of Swiss research boutique Ineichen Research & Management, at Terrapinn’s Hedge Fund World Zurich conference last week. “Which means in a nutshell, profits are good and losses are not.” Indeed, one differentiating characteristic of the absolute return investment philosophy, when compared to the relative return paradigm, is the aim to survive financial accidents and avoid negative compounding.

The “absolute returns” moniker has been abused, Ineichen explains in his April-2010 report called “Absolute Returns Revisited.” If a long-only fund is re-branded to include the “absolute returns” moniker, it does not mean that it is indeed an absolute returns vehicle. A TAA (tactical asset allocation) program that is fully invested at all times also doesn’t fit the premise of an absolute return vehicle. Buyers beware. A lot of mischief has been done with this term, he argues.

The absolute return model is de......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing

  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Other Voices: Hedge fund marketing and the selling cycle[more]

    By Bruce Frumerman. How long is the selling cycle now? That’s a question my financial communications and sales marketing consulting firm has been asked on a regular basis by hedge fund firm owners and sales people, ever since we opened the doors to our firm in 1987 pre-crash. Wa

  2. People - Solus Alternative Asset Management adds chief strategist from BTIG[more]

    From Daniel Greenhaus joined hedge fund manager Solus Alternative Asset Management as managing director and chief strategist. He will work closely with Chris Bondy, Solus’ chief economist, managing director and executive vice president, said Chris Pucillo, CEO and chief investmen

  3. Opalesque Roundtable: Seeding deal terms can be onerous for hedge funds[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Executives from fund of funds firms, family offices, a placement agent, a private equity firm, and an accounting firm gathered in Connecticut last month for the

  4. Opalesque Roundtable: Family offices flock to co-investment[more]

    Bailey McCann, Opalesque New York: Co-investments have been a hot topic for pension funds in recent years, as they try to move away from high fees and improve transparency. But now, family offices are more readily getting into the mix and establishing in-house deal teams, according to the delega

  5. More institutional investors invest in CTAs compared to last year despite dissatisfaction with performance[more]

    Benedicte Gravrand, Opalesque Geneva: "Despite a strong start to 2015 for CTAs in Q1, commodity market conditions have made return generation difficult for fund managers over much of the rest of the year to date," says Preqin’s November