Mon, Sep 22, 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. SEC charges 19 investment firms and one trader for breach of Rule 105[more]

    Benedicte Gravrand, Opalesque Geneva: The Securities and Exchange Commission (SEC) started a push to enhance the enforcement of Rule 105 of Regulation M last year to uncover hedge funds and private equity firms that have illegally participated in an offering of a stock after short selling it duri

  2. Fund managers, bullish on Europe, anticipate monetary policy separation of Fed and ECB[more]

    Komfie Manalo, Opalesque Asia: At least 202 fund managers with $556bn of assets under management said that while the European Central Bank (ECB) has eased its monetary policy that sent sentiments towards Europe to pick up, the Fed is expected to hike its rate in the spring of 2015. Investor

  3. Institutions - North Carolina workers call on state pension to dump up to $6bn in hedge funds, UK pension fund criticizes hedge fund fees[more]

    North Carolina workers call on state pension to dump up to $6bn in hedge funds From Forbes.com: The State Employees Association of North Carolina this afternoon called on state Treasurer Janet Cowell to withdraw all investments in hedge funds, which appear to amount to approximately $6 b

  4. News Briefs - Limited partners of investment managers may be subject to self-employment taxes, Just one week left until NYC's Rocktoberfest[more]

    Limited partners of investment managers may be subject to self-employment taxes On September 5, 2014, the Internal Revenue Service (“IRS”) issued Chief Counsel Advice 201436049, concluding that members of an investment manager were subject to self-employment taxes with respect to their e

  5. Institutions - Adviser's faith in hedge funds unshaken by CalPERS' move Advisers weigh in on CalPERS’ decision, Gina Raimondo sees no reason to follow California’s lead, exit hedge funds, Danish pension funds step up 'alternative investments'[more]

    Adviser's faith in hedge funds unshaken by CalPERS' move From WSJ.com: Financial advisers who use hedge funds in their clients' portfolios say they aren't rethinking that approach after a huge California pension fund announced plans to exit the hedge-fund market. The decision by the Cali