Tue, Apr 7, 2020
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Understanding tail-risk hedges and funds - part one
Monday, July 16, 2012

Bailey McCann, Opalesque New York:

Conversations surrounding tail-risk started gaining more frequency with both investors and funds starting with the collapse of Long Term Capital Management as a result of the 1998 Russian debt default crisis. Since then, rolling crises from the 2007 "quant" crisis, to the 2008 global financial meltdown and most recently Grexit have made tail-risk hedging a hot topic. New funds, books, papers, and summits are springing up throughout the financial universe discussing tail-risk, whether it can be effectively hedged and how investors can fund the experiment. In this series, Opalesque will examine some of the more common tail-risk hedges, the funds in this space and what investors can expect.

The 10,000 foot view

Tail-risk strategies are essentially designed to perform well in the worst of market conditions. They act as insurance policies, requiring investors to pay in to a losing strategy until something bad happens. Tail-risk hedges are said to be most effective in environments where market participants see declines of at least 20%, providing much needed liquidity while the rest of their portfolio is spiraling toward the bottom. These declines are commonly known as fat-tails or black swan events. The individual strategies themselves are derived from calculating the probability of such events.

Tail-risk hedges are gaining more attention from institutional investors like public pension funds which have a mandate ......................

To view our full article Click here
Article link
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. Investing: Ray Dalio's Bridgewater scales down European short bets after $3.2bn windfall, Here's what top hedge funds are buying in the coronavirus stock market crash[more]

    Ray Dalio's Bridgewater scales down European short bets after $3.2bn windfall From Financial News: Bridgewater Associates, the world's biggest hedge fund, has retreated from shorting European stocks after making an estimated €2.9bn ($3.2bn), as its founder and co-chairman Ray Dalio c

  2. Bill Ackman writes letter to shareholders on coronavirus[more]

    Pershing Square Holdings (PSH)'s Bill Ackman wrote a letter to investors outlining his insight on the coronavirus pandemic in the United States. He revealed that PSH completed the process of exiting the hedges on 23 March, netting a gross $2.1bn for PSH, after turning 'increasingly positive on equit

  3. New Launches: LGPS Central sets up investment grade bond fund, Leeds Equity Advisors aims to raise $1bn for PE fund, RLI Investors to launch European last-mile logistics fund, DBL Partners IV targets $450m[more]

    LGPS Central sets up investment grade bond fund From IPE: LGPS Central, the asset pooling vehicle for eight local government pension schemes (LGPS) based in England's Midlands, has launched a global investment grade corporate bond fund in order to meet its partner funds' needs. The po

  4. Investing: Marathon sees cheap assets amid dislocation in credit, Deerfield's health care buying spree, It's time to buy shares again, says BlackRock, Credit Suisse, Fed is buying credit ETFs but one hedge fund is shorting them[more]

    Marathon sees cheap assets amid dislocation in credit From Bloomberg: Distressed-investment specialist Marathon Asset Management is buying beaten-up debt amid the greatest dislocation in credit markets since 2008, according to Bruce Richards, co-founder and chief investment officer of the

  5. People: Carlyle picks 2 deputy heads for Japan buyout advisory team, Ex-Kleinwort Hambros adviser takes senior role at multi-family office boutique[more]

    Carlyle picks 2 deputy heads for Japan buyout advisory team From PIonline.com: Takaomi Tomioka and Hiroyuki Otsuka were named deputy heads of the Japan buyout advisory team at Carlyle Group. The positions are new, confirmed a spokeswoman for the New York-based private markets investment g

Click here for More about Opalesque Tracking
- A new, unique Premium Service -
  1. Edgestream Capital
  2. Autonomy Capital
  3. Trafalgar Capital
  4. GSA
  5. Field Street
  1. Rothstein Kass
  2. goldentree
  3. standard pacific
  4. ids capital
  5. bischoff