Thu, Oct 30, 2014
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. Macks aim to raise $750m for real estate debt fund[more]

    From Therealdeal.com: Father-son duo William and Richard Mack and former Blackstone Group managing director Peter Sotoloff are starting a new real estate debt fund. Together, the trio hopes to raise more than $750 million for the private equity fund, according to the Wall Street Journal. The fund wi

  2. Commodities - Oil wreaking havoc on small-cap energy stocks sliding 36%[more]

    From Bloomberg.com: Owning almost anything in the U.S. stock market has been a losing proposition since September. Owning smaller energy companies has been a catastrophe. Hercules Offshore Inc. and Resolute Energy Corp. are among 19 oil-and-gas equities in the Russell 2000 Index that lost more than

  3. Investing - Hedge funds favor equity long/short, Strategic bond managers hedge against further high yield sell-off[more]

    Hedge funds favor equity long/short From Securitieslendingtimes.com: Equity long/short strategies will generate good returns for hedge funds in the future, according to a panel at this year’s Risk Management Association Conference on Securities Lending in Naples, Florida. Panellists Sand

  4. Legal - Ex-hedge fund analyst weeps as judge hands down 5 year sentence, Former Columbus investment manager Steven P. Moore indicted on theft charges, SEBI confirms ban for Hong Kong hedge fund, SEC announces enforcement action against compliance officer[more]

    Ex-hedge fund analyst weeps as judge hands down 5 year sentence From Hereisthecity.com: An ex-hedge fund analyst was sentenced to 5 years in prison for his role in insider-trading scheme. The New York Post reports that former hedge fund analyst Matthew Teeple was sentenced Thursday to fiv

  5. Manager Profile - Seth Klarman: Lessons for retail and institutional investors[more]

    From Valuewalk.com: Seth Klarman is virtually unknown outside value circles, despite his impressive record and value of assets under management. On average Baupost has returned 19% p.a. despite holding a large portion of its assets in cash. During the financial crisis, Seth Klarman’s funds lost some