Sun, May 24, 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. Comment - Top hedge fund managers talk about how easy their jobs have gotten, BlackRock to Schroders warn of Argentina’s $20bn bond glut, The 35-year “investment supercycle” is drawing to a close, says Bill Gross, Gundlach: When the Fed starts hiking rates, 'GET OUT' of this asset class[more]

    Top hedge fund managers talk about how easy their jobs have gotten From Businessinsider.com.au: Time was, before the financial crisis hit, corporate boards treated multi-billion dollar hedge fund managers like Jehovah’s Witnesses pounding on their doors and flashing bibles. But no more.

  2. T Rowe's challenge to Dell deal may fuel critics of 'appraisal'[more]

    From Reuters.com: An increasingly popular tactic used by hedge funds and others to extract more money from buyouts could soon face a major courtroom test when a big investor in Dell Inc may argue that it should be paid a higher price for the 2013 acquisition of the PC maker. The strategy, known as "

  3. News Briefs - Ergen says LightSquared plan unfairly favors hedge funds, Why hedge fund managers make good advisory clients, I learned a lot about dad-bros after spending 4 days in Vegas with 2,000 hedge funders[more]

    Ergen says LightSquared plan unfairly favors hedge funds LightSquared Inc.’s bankruptcy plan gives hedge funds that invested in the broadband company a leg up while blocking telecommunications firms from competing with it, a fund owned by Dish Network Corp. Chairman Charles Ergen said in

  4. Opalesque Exclusive: SEC approves proposed changes to Form ADV, '40 Act - comment period to follow[more]

    Bailey McCann, Opalesque New York: Hedge funds and providers of liquid alternatives will want to pay close attention to proposed reforms approved by the SEC yesterday. The changes will require more frequent reporting, as well as a closer look into social media, liquid alternative strategies, and

  5. Opalesque Exclusive: Ovation Partners targets opportunities where few "natural lenders" participate[more]

    Benedicte Gravrand, Opalesque Geneva for New Managers: Changes in financial regulations post-2008 (Dodd-Frank and Basel III) are forcing banks to significantly alter their core lending businesses. And as mid-sized

 

banner