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Alternative Market Briefing

Emerging hedge fund managers can offer diversification in 'new normal’ challenging climate

Friday, November 30, 2012

by Beverly Chandler, Opalesque London:

Jeroen Tielman, chief executive officer and founder of hedge fund seeding platform IMQubator has named the current challenging market scenario as 'new normal’. Bonds he dismisses as offering return free risk rather than risk free return, and he finds that the uncertainties in the markets make investors react with more of a binary risk on / risk off behaviour.

"The consequence is that investors are seeking safe havens including cash" Tielman says in an interview with Opalesque, "So we are saying what does this mean for hedge funds and emerging managers in the hedge fund space?"

Tielman believes that in addition to providing investors with diversification, within the 'new normal’, IMQubator likes some strategies more than others. "We like strategies that are negatively correlated with equity exposure. For example strategies that exploit behaviour biases in equity bear markets; we like strategies that benefit from market activity in different forms of marketmaking techniques. We like volatility strategies, especially those that benefit from volatility spikes that occur when there are major equity drawdowns. In systematic, we like the faster reacting approaches like with some short CTAs do or range break out strategies. In discretionary we like strategies capable of decision making ahead of events, like global macro or discretionary commodity or forex traders."

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