Sat, Aug 23, 2014
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. Institutions – Texas Employees sets 2015 tactical plan for alternatives, CalPERS' real estate consultant cautions the pension fund's investment committee, Why Sunsuper likes hedge funds[more]

    Texas Employees sets 2015 tactical plan for alternatives From PIOnline.com: Texas Employees Retirement System will invest in up to four new hedge funds in the next fiscal year, which begins Sept. 1. Trustees approved 2015 tactical investment plans for the hedge fund, private equity and in

  2. Private equity follows hedge funds into reinsurance for long-term capital[more]

    From Artemis.bm: It’s not just hedge funds that are entering the insurance and reinsurance market in search of so-called long-term capital to put to work in their strategies, private equity firms targeting the space are also seeking opportunities to add assets under management. The entry of large pr

  3. North America – New York City’s next hot neighborhoods targeted with property funds[more]

    From Bloomberg.com: New York’s real estate world is filled with tales of ordinary people who bought property decades ago and saw values skyrocket to the millions. Seth Weissman is seeking investors to get in early on the next hot neighborhoods. The veteran of Goldman Sachs Group Inc. and hedge

  4. Investing – George Soros bets $2bn on stock market collapse, Warren Buffett's Berkshire reveals Charter stake, cuts DirecTV, Hedge funds lusting to cash out of MGM, Top hedge fund managers are buying Ally Financial, Hedge funds dumped 5m Herbalife shares in Q2, Paulson & Co hedge fund ups Puerto Rico real estate bet, Netflix Inc., Citigroup Inc, Google Inc are top new picks in Tiger Management’s 13F[more]

    George Soros bets $2bn on stock market collapse From Newsmax.com: Billionaire investor George Soros has increased his financial bet that U.S. stocks will collapse to more than $2 billion. The legendary hedge fund manager has been raising his negative bet on the Standard & Poor's 500 Inde

  5. Investors now net short S&P500 and increased Russell shorts, technicals suggest further selling[more]

    Komfie Manalo, Opalesque Asia: Market Neutral funds increased their market exposure to -1% net short from -6% net short last week, according to Bank of America Merrill Lynch’s Hedge Fund Monitor. The report also added