Thu, Feb 11, 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. Credit Suisse cherry picks hedge fund ideas[more]

    From FT.com: Credit Suisse Asset Management plans to cherry pick profitable concepts from hedge funds with the launch in Europe of a “best ideas” strategy. The investment arm of the Swiss bank said the strategy will separate it from other funds blighted by “overcrowding problems”. It comes at a time

  2. Investing - Hedge funds bet on risks in U.S. blue-chip debt, Hedge funds bets against bank credit risk paying off, Tiger Global still likes Internet names, gets pointers from Jeter[more]

    Hedge funds bet on risks in U.S. blue-chip debt From WSJ.com: Hedge funds are betting the next bond sector to crack will be the $4.5 trillion market for the safest U.S. corporate debt. New York’s Perry Capital has placed a $1 billion wager against investment-grade bonds issued by 10 comp

  3. Short Selling - Hedge fund manager Kyle Bass is shorting real estate—again, Top US hedge fund has €80m short position in Paddy Power Betfair[more]

    Hedge fund manager Kyle Bass is shorting real estate—again From Fortune.com: He also predicted the mortgage crisis in 2008. Hedge fund manager Kyle Bass, who runs Dallas-based Hayman Capital, tanked the stock of a little-known real estate financier Friday by revealing that he is shorting

  4. Investing - Real estate secondaries sole 'bright spot' in 2015, As hedge funds stumble, one firm prepares to buy illiquid stakes[more]

    Real estate secondaries sole 'bright spot' in 2015 From IPE.com: The secondary market for property was the sole “bright spot” over the course of 2015, as hedge fund secondaries saw deals fall by two-thirds, according to a wide-ranging survey of the market. Setter Capital said 2015 saw th

  5. Opalesque Exclusive: Directors want to be considered trusted partners by new manager[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: A hedge fund director provides her perspective on emerging hedge fund managers. She will happily work with those who have set themselves up for future growth, s