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

PIMCO’s Vineer Bhansali discusses 'Tail Risk Hedging’

Friday, April 19, 2013

From Komfie Manalo, Opalesque Asia:

According to Vineer Bhansali, managing director and portfolio manager, head of quantitative investment portfolios and a member of the asset allocation committee at PIMCO, it pays to be countercyclical in the context of tail risk hedging.

Speaking to Sona Blessing on Opalesque Radio, Bhansali elaborates on the trade-off between the cost of protection and securing returns, and instruments in the tool box that can be set up as hedges against political risk.

He says the main reason for countercyclical tail risk hedging is "because the prices of tail risk hedging move inversely to how the markets are doing. So when markets are falling and volatilities are high and everybody wants to buy tail risk protection - that is usually the worst time to be buying tail risk protection because it is very expensive. It actually makes more sense to be buying risky assets [then] because everybody else is selling risky assets. On the other hand when markets are rallying, for example equity markets have been up over 15% in the last 12 months or so, everybody forgets the last crisis and the price of protection falls. That is usually the best time to buy protection."

Bhansali shares that PIMCO’s tool kit is quite broad and when they think of tail risk hedging they are not always thinking of buying options.......................

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 Roundup: Hedge funds shrink as liquidations outpace new launches in Q1: hedge fund news, week 27[more]

    In the week ending 17 May, 2016, HFR said hedge fund liquidations declined narrowly to begin 2016 after rising sharply to conclude 2015, as investors positioned f

  2. Europe - Hedge funds keep powder dry over big Brexit bets, Hedge funds sense profit in Europe shock waves after Brexit vote, Soros warns Brexit may cause pound plunge worse than Black Wednesday, After Brexit: What will happen if Britain votes to leave the UK?[more]

    Hedge funds keep powder dry over big Brexit bets From FT.com: Hedge funds are shying away from big bets on Brexit, with many unwilling to risk further losses having already suffered a painful first half of the year. With the outcome of a UK vote on the country’s membership of the Europea

  3. News Briefs - ’Flash Boys’ get green light to launch stock exchange, Pimco says ‘storm is brewing’ in U.S. commercial real estate, Bankers get ready to rumble at Hedge Fund Fight Night, AIMA Australia celebrates 15th anniversary[more]

    ’Flash Boys’ get green light to launch stock exchange In an investing environment ruled by fast, the newest U.S. public stock exchange is banking on slow. Well, slower. IEX Group, which won Securities and Exchange Commission approval on Friday to go head-to-head with the New York Stock E

  4. Blackstone buys minority stake in New York-based credit hedge fund Marathon[more]

    Benedicte Gravrand, Opalesque Geneva: Blackstone Strategic Capital Holdings Fund, a vehicle managed by Blackstone Alternative Asset Management (BAAM), has acquired a passive, minority interest in Marathon Asset Management, for an undisclosed sum. Based in New York,

  5. Global markets fell, hedge funds gain in mid-June on Brexit, Fed rate concerns[more]

    Komfie Manalo, Opalesque Asia: Global financial markets declined through mid-June, as uncertainty associated with the upcoming Brexit referendum and expected U.S. Fed interest rate hike contributed to increases in volatility across asset classes, data provider