Mon, Jul 25, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Hedge funds add value to balanced portfolios but investment process and strategies are important

Tuesday, April 24, 2012

From Precy Dumlao, Opalesque Asia – In SEB Group’s latest report titled, "Hedge funds – avoiding a simplistic approach," the Nordic bank which describes itself as a relationship bank, has concluded that hedge funds add value to balanced portfolios. But it warned though that it is very important to include a process that identifies hedge funds with distinct targeted characteristics and to mix the strategies that suits the specific contest.

In the report, SEB has found that the hedge fund industry’s limited diversification was exposed at the height of the global financial crisis in 2008 at a crucial time when investors needed it most. Last year again tested investors’ patience as the industry was pummelled with performance challenges.

"The potential for alpha has been suppressed by more crowded markets and technological progress. This means selection is key – to either identify funds with better than average alpha or those offering superior diversification," SEB said.

In a balanced portfolio, hedge funds with average characteristics are not attractive even in an optimistic alpha scenario where the Sharpe ratio is elevated – as the correlations with other assets are too high, the report said and added, "On the other hand, diversifying strategies are attractive even in a conservative (no alpha) scenario, where they make up 4-8% of a balanced portfolio depending on risk profile (chart 2, where the re......................

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. Opalesque Exclusive: California-based manager launches long/short equity hedge fund with unique algorithm[more]

    Benedicte Gravrand, Opalesque London for New Managers: SJL Capital LLC, an investment advisory firm based in California, has launched its maiden fund, the SJL MarketDNA Hedge Fund LP. The fund, which began trading

  2. Manny Roman to move from Man to Pimco[more]

    Benedicte Gravrand, Opalesque London: Emmanuel (Manny) Roman, an investment world veteran, has been hired by PIMCO, the large US bond fund house, as chief executive officer. PIMCO's current CEO Douglas Hodge will assume a new role as managing director and senior advisor when Roman joins P

  3. Opalesque Exclusive: ArbitrOption outperforms benchmarks, up 7.18% in H1[more]

    Komfie Manalo, Opalesque Asia: Independent registered advisor ArbitrOption breezed through the tumultuous Brexit referendum and outperformed its benchmarks. ArbitrOption was up 7.18% in the first half of 2016 compared to the S&P 500 which gain

  4. Europe - European hedge funds shrink and shutter as turmoil hurts returns, Investors go bargain-hunting for U.K. property after Brexit vote, Brexit: Guidance for fund directors - what to know and what to ask[more]

    European hedge funds shrink and shutter as turmoil hurts returns From Bloomberg.com: Europe’s hedge-fund industry contracted for a sixth straight quarter as the U.K.’s decision to leave the European Union and concerns that China’s growth is slowing caused losses and forced some money man

  5. Platinum Partners starts liquidation of hedge funds following municipal union kickback scandal[more]

    Komfie Manalo, Opalesque Asia: Platinum Partners, the hedge fund in the middle of a New York City municipal union kickback investigation, is reported to be liquidating two of its funds, the New