Tue, Jul 7, 2015
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

The benefits of convergence and divergence in a diversified hedge fund portfolio

Monday, August 12, 2013

amb
Andrew Fisch
Benedicte Gravrand, Opalesque Geneva:

What exactly is a convergence-divergence strategy? Andrew Fisch, Co-CIO at SSARIS Advisors, LLC explains it to Sona Blessing on Opalesque Radio. Based in Wilton, CT, SSARIS is a manager of absolute return hedge fund and hedge fund of fund strategies.

Sub-strategies in funds of funds, as we saw in the last few years, tend to correlate to one another during times of crisis, despite the managers’ best efforts to reach diversification. But those who use convergence and divergence strategies strategically can avoid this correlation problem.

Convergence and divergence are two styles of investing, Fisch states; "in periods of stress, convergence strategies and divergence strategies tend to be negatively correlated to each other, so one offsets the risks of the other, providing capital preservation under stressful environments."

Convergence strategies rely on normal market behaviour, he explains, i.e. markets that are liquid and rational. One example is the market neutral strategy.

Such strategies often require leverage to inflate returns that are normally small. However, "convergence strategies, especially when run with large leverage, when markets become disrupted… they experience these tail events as part of their cycle." At SSARIS, the managers assume that in every cycl......................

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: New systematic strategy managed alongside research firm outperforms S&P500[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: An emerging CTA manager explains how he runs his strategy, which is based on an index produced by a research firm. Peter Turk is head of

  2. Opalesque Exclusive: New systematic strategy embraces machine learning[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: The founder of a New York-based systematic trading firm, which offers a hybrid between alpha strategies and alternative feta at lower fees, describes his approa

  3. Larry Robbins' hedge fund Glenview buys 1m Tenet Healthcare shares[more]

    Komfie Manalo, Opalesque Asia: Glenview Capital Management said it bought an additional 979,482 shares at Tenet Healthcare Corp valued at $53.80 million, raising its stakes in the healthcare services company to 15.16%, reported

  4. Legal - Grayson’s hedge funds under scrutiny for possible ethics violations, Court rejects hedge fund’s motion to block merger of Samsung affiliates[more]

    Grayson’s hedge funds under scrutiny for possible ethics violations From Freebeacon.com: Rep. Alan Grayson is finding himself in hot water over managing hedge funds that bear his name, actions that are in possible violation of House ethics rules. Sitting members of Congress are prohibite

  5. Hedge funds decline in June as stocks tumble on Greek woes[more]

    From Bloomberg.com: Hedge funds posted losses across strategies last month as uncertainty over whether Greece will remain in the euro sent global stock markets tumbling. Winton Capital Management declined about 3.1 percent in June in its $12.1 billion Winton Futures Fund, leaving it down 1.9 percent

 

banner