Tue, Feb 9, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

1:1 liquidity correlation may not be enough

Wednesday, December 05, 2012

Benedicte Gravrand, Opalesque Geneva:

Raimond Schuster, CEO of ISP Securities, an independent global financial services firm with CHF1.5bn in AuM ($1.6bn) and offices in Zurich and in Israel, believes the current discussion on liquidity is changing the environment for hedge funds. He explained why at Terrapinn’s Hedge Funds World conference in Zurich in November 2012.

Liquidity correlation

ISP Group has invested in hedge funds since 1994, and has managed its own fund of hedge funds (FoHF) since 1997. The old school approach of managing liquidity in a FoHF portfolio involved spreadsheet listings, which estimated how much of the portfolio was in liquid assets, Schuster started. But this did not necessarily show the real picture.

According to Schuster, a traditional hedge fund portfolio consists of liquid and transparent strategies that take directional bets in listed instruments, and of illiquid strategies that employ the liquidity facilities of financial intermediaries. But late 2008 showed that the illiquid strategies were too dependent on the interbank liquidity, as when those dried up, the illiquid strategies suffered from heavy drawdown or became illiquid (or both).

"One can even ask whether a 1:1 liquidity correlation is enough," he noted.

After that, investors who needed liquidity redeemed from their funds, and found that......................

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. Investing - Avenue Capital's Marc Lasry: We like European bank loans, Comment: A bunch of hedge fund managers are chasing the 'dream of crushing a major structural problem'[more]

    Avenue Capital's Marc Lasry: We like European bank loans From CNBC.com: European banks are under immense pressure, but at least one prominent hedge fund has found what it thinks is a good opportunity in the wreckage. Marc Lasry, co-founder and chief executive of hedge fund Avenue Capital

  2. 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

  3. 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

  4. 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

  5. HFRU Hedge Fund Composite Index down -2.58% in January[more]

    Global financial markets posted sharp losses in January led by declines in Oil and global equities, though steep intra-month losses in both were narrowed by strong gains in final trading days of the month. Global equities posted steep declines for the month led by Biotechnology, Energy, Financial, E