Alternative Market Briefing

Ineichen research looks for enduring style in investments

Tuesday, February 26, 2013

Beverly Chandler, Opalesque London: Research firm Ineichen Research and Management has published a new report on hedge fund performance, commenting that returns have not been 'great’. The firm writes: "While long-term relative as well as absolute performance is still attractive, there is disappointment in the short-term. During the past four years of reflation, hedge funds have delivered low absolute returns and underperformed other, more traditional investments."

The firm examines recent performance and revisits some concepts related to absolute returns investing and active risk management. "Just because a long-only investment approach has outperformed a hedged investment approach over the past four years does not imply that the former is superior to the latter. Quite the contrary: Investing in a long-only fashion is still like driving up a hill in a car with no brakes; as long as it’s going up, everything seems fine. However, when it goes downhill on the other side, additional tools and skills are required to control risk".

The firm finds that 'boring is good. One of the key claims of our research efforts is that compounding matters. With "compounding" we mean the positive, steady, eventless, and therefore "boring" compounding of capital. If true then the management and control of downside risk is a key ingredient to financial success and survival. Compounding is an el......................

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