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Bailey McCann, Opalesque New York:

Downside risk hedges have always been a polarizing topic for investors. On one hand, the concept of insuring a portfolio against a drawdown seems prudent, but in practice, it can result in significant negative carry until a correction happens. In a prolonged rally, many investors eventually opt out of downside risk hedges because it seems like the correction isn't coming, only to get caught up in a sell-off. A new book, "The Second Leg Down" from Hari Krishnan, portfolio manager at London-based Cross-Border Capital, explores strategies for what to do after the initial sell-off when many downside strategies get expensive.

"Many managers view hedging from a very narrow perspective and I wanted to show that there are a wide range of hedging strategies that can be applied in adverse market conditions," Krishnan tells Opalesque.

Krishnan outlines a continuum of hedging strategies that are available to investors as markets move from quiet to calamitous. Examples include buying options and strikes when volatility is cheap and moving to weekly options when markets go down and hedging gets pricey.

The book is, in essence, an in-depth exploration of what Krishnan does for clients at Cross-Border. "Investors can seed a separately managed account with us in quiet markets. If they are comfortable with their core long positions, we do not do anything. A minimal operational fee will be charged. Once they become fearful, investors can ......................

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