Sat, Jan 31, 2015
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 Exclusive: Ex-Citi trader launches 'sleep-at-night’ long/short equity fund[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: After working at Citi's proprietary trading desk, managing a large portfolio between 2008 and 2011, Joel S. Salomon founded SalaurMor Management in New Yor

  2. Investing - U.S. investors favor currency hedged Europe ETFs as euro tumbles, Quants win back investors as Swiss franc fuels volatility gains, David Einhorn's $7bn hedge fund is loading up on this stock, Hedge fund BlueMountain Capital unveils Ocwen Financial short, claims default on notes[more]

    U.S. investors favor currency hedged Europe ETFs as euro tumbles From Reuters.com: U.S. investors stung by the falling euro who want to stay invested in Europe are turning to exchange-traded funds designed to strip out the impact of the region's currency. The biggest among so-called "cur

  3. News Briefs - Millennials use tech tools to jump into investing, Winklevoss twins to launch bitcoin exchange with FDIC insured deposits, Robertson’s legacy from hedge funds to New Zealand, Real estate managers exploring smaller open-end funds[more]

    Millennials use tech tools to jump into investing It is the Facebookification of monetary investing. From social networking platforms that enable young investors to stick to every other's stock-picking mojo, to internet sites for initially-timers hungry for a piece of the Silicon Valley

  4. Update: Prosecutors seek 12 years for hedge fund manager Francisco Illarramendi[more]

    Komfie Manalo, Opalesque Asia: Federal prosecutors have asked the court to sentence convicted hedge fund manager Francisco Illarramendi to 12 years imprisonment for running an elaborate Ponzi scheme that bilked investors hundreds of millions in dollars, including a Venezuelan pension fund, report

  5. Institutions - Ontario pension fund leader calls all asset classes ‘expensive’, Taiwan's BLF plans $2bn in alternative mandates[more]

    Ontario pension fund leader calls all asset classes ‘expensive’ From WSJ.com: The head of one of the world’s largest pension funds said that across asset classes, “everything is expensive.” Ron Mock, who leads Canada’s $141 billion Ontario Teachers’ Pension Plan, said that the plan would