Thu, Apr 27, 2017
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: Ex-Man manager combines sustainable investing with AI/ML[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Dr. Richard Bateson, quant fund manager and physicist, has recently

  2. Alternative asset firm YieldStreet surpasses $100m of loans funded in less than 8 quarters[more]

    Komfie Manalo, Opalesque Asia: Alternative asset investment platform YieldStreet reported that it has surpassed $100m in loans funded in less than eight quarters from accredited investors and single family offices. YieldStreet was founded by Milind Mehere and Michael Weisz. In a

  3. Investing - Investor appetite for high-growth IPOs to be tested, Apollo boosts fund's stock allowance for 'diamonds in the rough', Hedge funds uncertain over outlook for Hargreaves Lansdown[more]

    Investor appetite for high-growth IPOs to be tested From FT.com: The US listings market is poised for a busy week with deals that will test investors' appetite for high-growth - but lossmaking - companies. Eight new listings are scheduled for this week, the most since October of 2016,

  4. Hedge funds holding Puerto Rico bonds are looking at a long battle[more]

    Komfie Manalo, Opalesque Asia: Hedge funds which bought Puerto Rico's distressed debt bonds are facing the prospect of a long road ahead to recover their investments as the Caribbean island is attempting to use a U.S. Congress-approved rule that allows it to exploit a bankruptcy-like proceedings

  5. Other Voices: "Winner-take-all" dynamics and hedge fund investing[more]

    A growing stream of thinking in microeconomics is the concept of "winner-take-all" dynamics. The idea seems simple. A combination of networking economics and classic economies of scale creates situations where there are just a few dominant firms or economic agents who are able to capture significant