Sat, Feb 24, 2018
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Industry Updates

Ineichen’s latest report: Equity hedge revisited

Friday, September 10, 2010
Opalesque Industry Update - Some of the proxies for risk aversion have been increasing lately, somewhat similar to autumn 2007. The lower the yield curves in the West-ex Japan, the higher is the probability that a Japan-like, deflationary environment is what we’re up against. Inflation fears have been easing and don’t seem to be a big worry at the moment.

Throughout the summer, data signals have become more alarming. US Banks continue to hoard cash. Many proxies for business and consumer sentiment have risen to April/May 2010 but are now off those interim highs.

For equity investors, autumn has its perks. Many corrections occurred in autumn. Whether this will hold true in 2010 we do not know. However, self-fulfilling prophecy can work in mysterious ways.

We recommend hedging directional equity risk for a while. The institutional investor has various options to execute such a view, two of which are (i) replace long-only exposure through long/short exposure, (ii) hedge by using simple overlay strategies.

Recent hedge funds performance was sub-stellar. Neither the hedge fund industry nor equity long/short has reached its high-water mark. Investors are growing tired of hearing that the performance of hedge funds looks pretty good given circumstances. They shouldn’t. Equity long/short seeks to benefit from opportunities within the equity market.

The equity risk premium could be regime-specific, i.e., a function of rising population. Japan has a falling population and a negative equity risk premium. Coincidence? Hardly.

The full report can be downloaded from www.ineichen-rm.com


Ineichen Research and Management (“IR&M”) is a research boutique focusing on investment themes related to absolute returns.


Bg

What do you think?

   Use "anonymous" as my name    |   Alert me via email on new comments   |   
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. Art & Motion launches collectible car alternative investment vehicle[more]

    Komfie Manalo, Opalesque Asia: Luxembourg-based Art & Motion has launched a new investment vehicle dedicated to vintage cars and exceptional high-quality vehicles as this collectible market has grown exponentially the turn of the centu

  2. Opalesque Exclusive: Global Sigma captures February's long-vol trade[more]

    Bailey McCann, Opalesque New York for New Managers: Florida-based Global Sigma rode February's volatility to new highs. The firm's AGSF strategy is up +2.8 percent through February 16 and +4.2 percent YTD a

  3. Institutional Investors - Hedge funds regain their appeal for a $57 billion asset manager, Private credit strategies in stratosphere[more]

    Hedge funds regain their appeal for a $57 billion asset manager From Bloomberg.com: With volatility back on the radar, one of the Nordic region's biggest asset managers is considering relying a bit more on hedge funds to help oversee his portfolio. Mikko Mursula, the chief investment off

  4. Investing - All aboard for hedge funds as trade tide lifts shipping, Hedge funds pile into Time Warner in bet on merger success[more]

    All aboard for hedge funds as trade tide lifts shipping From Reuters.com: Forced to abandon ship after mistiming their investments five years ago, hedge funds are venturing back in a bid to profit from growing global trade flows. Around 90 percent of traded goods by volume are tran

  5. Investing - Hedge funds turn short on tech just as stock rally takes off, After biggest short, speculators slash bearish US bond bets as supply deluge looms[more]

    Hedge funds turn short on tech just as stock rally takes off From Newsmax.com: A key group of investors has just missed out on the biggest tech-stock rally since 2014. Hedge funds and other large speculators turned net short on Nasdaq 100 Index futures for the first time in 21 months, ac