Sat, Aug 29, 2015
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. Investing - Hedge funds suddenly find real money is back in Argentina's debt, Elon Musk buys more SolarCity stock following hedge fund manager short, BlackRock plans to get into rental-home financing[more]

    Hedge funds suddenly find real money is back in Argentina's debt From Bloomberg.com: The real money is back in Argentina. Before the country’s default in July 2014 (its second in 13 years), most long-term investors abandoned its bond market. As they rushed out, Argentina became a favorit

  2. Activist News - Carl Icahn has snapped up a huge stake in Freeport-McMoRan, and the stock is ripping, Meet Europe's best activist investor[more]

    Carl Icahn has snapped up a huge stake in Freeport-McMoRan, and the stock is ripping From Businessinsider.com: Carl Icahn has picked his next target: Freeport-McMoRan. Icahn and a group of other investors have snapped up an 8.46% stake in mining company Freeport-McMoRan, according to a j

  3. North America - Hedge fund manager Ray Dalio’s challenge to the Fed[more]

    From Newyorker.com: For some reason, Janet Yellen, the chair of the Federal Reserve, decided to skip this year’s annual Fed conference in Jackson Hole, where monetary policymakers from the United States and abroad get together with some prominent academics to discuss the big issues of the moment. Th

  4. Performance - Hedge funds set to bank millions by short selling during London share slump, The China market chaos has made this hedge fund its most money in 2 years, Odey hedge fund said to surge 9% betting against China, Hedge funds with long-held bearish views on China rack up profits, Hedge funds in U.S. seen curbing damage from August turbulence, Hedge funds collect on their predictions of a fall, How did managed futures do while the Dow was down 1000[more]

    Hedge funds set to bank millions by short selling during London share slump From TheGuardian.com: Hedge funds are set to bank tens of millions of pounds from the slump in share prices in London, having bet almost £18bn that the FTSE 100 would fall. The funds making the bets include Lansd

  5. Opalesque Exclusive: John C Head IV leaves alternative investment firm Gallery Capital, David Harrison joins as co-CIO[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: John C Head IV, former president and co-founder of Gallery Capital Management, an alternative inv

 

banner