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Alternative Market Briefing

Structured assets outperform in risk on/risk off environment

Monday, August 13, 2012

amb
Ernesto Prado
Bailey McCann, Opalesque New York:

Ernesto Prado is Chief Investment Officer and Partner at Ayaltis AG, a fund of hedge funds. Prior to founding Ayaltis, Ernesto was CIO of Peak Partner SA. He is a veteran of the finance industry, having also worked and Solomon Brothers. More recently, his work at Ayaltis was rewarded with two InvestHedge Awards (2007) for best-risk adjusted returns in the fixed income category during the subprime crisis. He was recently interviewed by Sona Blessing for Opalesque Radio.

According to Prado, he was able to achieve these returns by starting early on with a very clear understanding of the Macro environment. He explains that during a time marked by uncertainty such as this, his team has been able to build on that early understanding to create portfolios that are able to withstand a risk on/risk off environment and still generate returns.

"In this environment you could select from a sound strategy and you might be fundamentally correct on the valuation, but because Greece is about to default it completely fakes the fundamental analysis," he says, noting instead that investors and managers alike also need to factor in price distortions that are currently widespread throughout markets due to the debt crisis in both the US and Europe and subsequent central bank interventions. "All of the assets are sitting on a pedestal of sovereign risk."

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