Mon, Jan 26, 2015
A A A
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. Commodities - Druckenmiller alums at PointState make $1 billion on oil, Andurand Capital sees oil sliding to $40[more]

    Druckenmiller alums at PointState make $1 billion on oil From Bloomberg.com: Hedge fund manager Zach Schreiber stood on stage at Avery Fisher Hall in New York eight months ago and made a bold prediction. “We believe crude oil is going lower -- much lower,” Schreiber, 42, told the audienc

  2. Investing - David Einhorn discloses a new position in Time Warner, Canyon trimming bets on mortgage bonds after making $7bn[more]

    David Einhorn discloses a new position in Time Warner From FTLeavenworthlamp.com: …Einhorn also disclosed a new position in Time Warner. "Since 2009, TWX has refocused its business into a collection of high quality assets including basic cable networks (Turner and CNN), a movie studio (

  3. Top performing private equity firms you should invest in[more]

    Komfie Manalo, Opalesque Asia: Professor Oliver Gottschalg of Paris-based HEC Business School, also known as Ecole des Hautes Etudes Commerciales de Paris has released his annual ranking of the top performing private equity firms. The 2014 HEC-DowJones Private Equity Performance Ranking

  4. Comment - Why invest in hedge funds if they don't outperform the market?[more]

    From Forbes.com: Hedge funds have always been a bit exotic and an enigma to some, but bottom line they are supposed to produce good returns using a range of strategies including global macro, event driven and relative value (arbitrage). And, sophisticated or high-net-worth individuals (HNWIs) could

  5. Owen Li 'truly sorry' for blowing up $100m of hedge fund’s assets[more]

    From CNBC.com: A hedge fund manager told clients he is "truly sorry" for losing virtually all their money. Owen Li, the founder of Canarsie Capital in New York, said Tuesday he had lost all but $200,000 of the firm's capital—down from the roughly $100 million it ran as of late March. "I take r