The undeniable global macroeconomic step change warrants a re-think of portfolio construction for the next investment cycle. The regulation of hedge funds presents an additional tool previously not available to the retail investor that can act as a component of greater certainty in a portfolio cognisant of a VUCA world
Warren Buffett recently discussed his win of a decade long wager in the 2017 Annual Report of Berkshire Hathaway. His winning claim was that an investment in a US equity index would outperform a selected group of hedge funds over the period. Although, over time, equity is a strong return generating asset class, the majority of investors are not in the privileged position where they not only have the luxury of time and emotional fortitude, but also sufficient excess capital to be able to fully invest in such a risky asset class to reap the reward that comes with time. The role of hedge funds in the portfolio construction of these investors is explored.
A sense of puzzlement surrounds the topic of hedge funds. Some investors are hesitant to invest because they find the concept foreign, preferring instruments with which they are more familiar. Others claim insight, but are quick to warn against the dangers of Hedge Funds, describing them as complex, high-risk investments that expose the investor to almost infinite downside risks in the pursuit of optimistic returns. Neither of these views are uncommon, although far from the truth. It is therefore important that these rumours and their origins are addressed and that investors are educated regarding the true nature of hedge funds.
In this presentation, we review methods and best practices for the portfolio construction and evaluation process. The presentation covers risk and return estimation, mean-variance optimization as well as techniques for analyzing exposure to loss and wealth potential.
PRELIMINARY AND INCOMPLETE
If a quali ed investor has a choice between investing in a secretive fund and a transparent fund with the same investment objective, which should she choose? Prior work suggests that the secretive fund is better. Hedge fund managers generally use their discretion for the bene t of their investors (Agarwal, Daniel and Naik, 2009, Agarwal, Jiang, Tang and Yang, 2013). In this study we identify a subset of hedge funds managers, which appear to use their discretion to feign skill. Using a proprietary dataset obtained from a fund of funds, we document that hedge funds that are more secretive earn somewhat higher returns than their investment-objective-matched peers during up markets, consistent with earlier papers documenting skill-based performance, but signi cantly worse returns during down markets. This evidence suggests that at least part of the superior performance that secretive funds appear to generate is in fact compensation for loading on additional risk factor(s) as compared to their objective-matched peers.
Warren Buffett recently discussed his win of a decade long wager in the 2017 Annual Report of Berkshire Hathaway. His winning claim was that an investment in a US equity index would outperform a selected group of hedge funds over the period. Although, over time, equity is a strong return generating asset class, the majority of investors are not in the privileged position where they not only have the luxury of time and emotional fortitude, but also sufficient excess capital to be able to fully invest in such a risky asset class to reap the reward that comes with time. The role of hedge funds in the portfolio construction of these investors is explored.
A sense of puzzlement surrounds the topic of hedge funds. Some investors are hesitant to invest because they find the concept foreign, preferring instruments with which they are more familiar. Others claim insight, but are quick to warn against the dangers of Hedge Funds, describing them as complex, high-risk investments that expose the investor to almost infinite downside risks in the pursuit of optimistic returns. Neither of these views are uncommon, although far from the truth. It is therefore important that these rumours and their origins are addressed and that investors are educated regarding the true nature of hedge funds.
In this presentation, we review methods and best practices for the portfolio construction and evaluation process. The presentation covers risk and return estimation, mean-variance optimization as well as techniques for analyzing exposure to loss and wealth potential.
PRELIMINARY AND INCOMPLETE
If a quali ed investor has a choice between investing in a secretive fund and a transparent fund with the same investment objective, which should she choose? Prior work suggests that the secretive fund is better. Hedge fund managers generally use their discretion for the bene t of their investors (Agarwal, Daniel and Naik, 2009, Agarwal, Jiang, Tang and Yang, 2013). In this study we identify a subset of hedge funds managers, which appear to use their discretion to feign skill. Using a proprietary dataset obtained from a fund of funds, we document that hedge funds that are more secretive earn somewhat higher returns than their investment-objective-matched peers during up markets, consistent with earlier papers documenting skill-based performance, but signi cantly worse returns during down markets. This evidence suggests that at least part of the superior performance that secretive funds appear to generate is in fact compensation for loading on additional risk factor(s) as compared to their objective-matched peers.
This is a very appropriate article if you are getting ready to retire and looking for an investment strategy that will preserve your hard earned savings and provide you with an income to last throughout retirement.
Agcapita December 2011 - Leverage is Dead, Long Live Value investingVeripath Partners
Financial leverage (at least as it has come to be used in the last 15 or so years) is the logical but abused investment tool of a great
30-year period of declining interest rates. I know this may seem
counter-intuitive in a negative real interest rate environment, but
I believe in the short to medium term most investments should
incorporate less leverage rather than more.
Clueless about investments? They are not as hard as you think. This workshop was created to help participants understand the basics of the financial instruments that they can use to achieve their goals.
On Tuesday, March 14th we hosted Andrew Weisman and Robert Bernstein for a conversation on controlling risk and trends they're seeing surrounding portfolio construction.
On Wednesday, November 14th we were joined by Cel Kulasekaran, Research Director at Windham Capital Management. Cel discussed factor analysis and how factor models can provide for a more complete understanding of portfolio risk.
WEBINAR HIGHLIGHTS:
-What is factor analysis?
-Common factors used in practice
-Single vs. multi factor models
-Factor models in practice
-Practical implementation issues
-Factor analysis case study on a diversified portfolio
Hedge funds have been criticized for taking hefty fees without a performance to match. This presentation takes a look at the issue of hedge fund performance looking at both sides of the equation and evaluating how hedge funds fit into an investment portfolio.
FIRST, RUSSIA – UKRAINE AND NOW IT’S ISRAEL –
HAMAS! WHAT IS LYING AHEAD FOR INDIAN MARKET ?
Investment
Gyan Market Indicators
Inspiring Investment Story
This is a very appropriate article if you are getting ready to retire and looking for an investment strategy that will preserve your hard earned savings and provide you with an income to last throughout retirement.
Agcapita December 2011 - Leverage is Dead, Long Live Value investingVeripath Partners
Financial leverage (at least as it has come to be used in the last 15 or so years) is the logical but abused investment tool of a great
30-year period of declining interest rates. I know this may seem
counter-intuitive in a negative real interest rate environment, but
I believe in the short to medium term most investments should
incorporate less leverage rather than more.
Clueless about investments? They are not as hard as you think. This workshop was created to help participants understand the basics of the financial instruments that they can use to achieve their goals.
On Tuesday, March 14th we hosted Andrew Weisman and Robert Bernstein for a conversation on controlling risk and trends they're seeing surrounding portfolio construction.
On Wednesday, November 14th we were joined by Cel Kulasekaran, Research Director at Windham Capital Management. Cel discussed factor analysis and how factor models can provide for a more complete understanding of portfolio risk.
WEBINAR HIGHLIGHTS:
-What is factor analysis?
-Common factors used in practice
-Single vs. multi factor models
-Factor models in practice
-Practical implementation issues
-Factor analysis case study on a diversified portfolio
Hedge funds have been criticized for taking hefty fees without a performance to match. This presentation takes a look at the issue of hedge fund performance looking at both sides of the equation and evaluating how hedge funds fit into an investment portfolio.
FIRST, RUSSIA – UKRAINE AND NOW IT’S ISRAEL –
HAMAS! WHAT IS LYING AHEAD FOR INDIAN MARKET ?
Investment
Gyan Market Indicators
Inspiring Investment Story
Following three very challenging years in the local asset management industry, investors and investment professionals have been forced to reconsider the effectiveness of their investment strategies for living annuities.
[LATAM EN] Convertible bonds offer investors equity-like returns with a risk ...NN Investment Partners
NN Investment Partners explains how convertible bonds offer investors equity-like returns with a risk profile comparable to that of bonds, from November 2015.
[EN] Convertible bonds offer investors equity-like returns with a risk profil...NN Investment Partners
NN Investment Partners explains how convertible bonds offer investors equity-like returns with a risk profile comparable to that of bonds, from November 2015.
[CH] Convertible bonds offer investors equity-like returns with a risk profil...NN Investment Partners
NN Investment Partners explains how convertible bonds offer investors equity-like returns with a risk profile comparable to that of bonds, from November 2015.
NN Investment Partners explains how convertible bonds offer investors equity-like returns with a risk profile comparable to that of bonds, from November 2015.
[UK] Convertible bonds offer investors equity-like returns with a risk profil...NN Investment Partners
NN Investment Partners explains how convertible bonds offer investors equity-like returns with a risk profile comparable to that of bonds, from November 2015.
[JP] Convertible bonds offer investors equity-like returns with a risk profil...NN Investment Partners
NN Investment Partners explains how convertible bonds offer investors equity-like returns with a risk profile comparable to that of bonds, from November 2015.
Joe Wirbick • J.W. Cole Financial, Inc.
- Diversification and the active manager by Linda Ferentchak
- Germany 2-year bond yield falls to negative territory
- Balancing active and passive investment strategies (Gary Ziegler, Transamerica Financial Advisors, Inc.)
The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
NO1 Uk Divorce problem uk all amil baba in karachi,lahore,pakistan talaq ka m...Amil Baba Dawood bangali
Contact with Dawood Bhai Just call on +92322-6382012 and we'll help you. We'll solve all your problems within 12 to 24 hours and with 101% guarantee and with astrology systematic. If you want to take any personal or professional advice then also you can call us on +92322-6382012 , ONLINE LOVE PROBLEM & Other all types of Daily Life Problem's.Then CALL or WHATSAPP us on +92322-6382012 and Get all these problems solutions here by Amil Baba DAWOOD BANGALI
#vashikaranspecialist #astrologer #palmistry #amliyaat #taweez #manpasandshadi #horoscope #spiritual #lovelife #lovespell #marriagespell#aamilbabainpakistan #amilbabainkarachi #powerfullblackmagicspell #kalajadumantarspecialist #realamilbaba #AmilbabainPakistan #astrologerincanada #astrologerindubai #lovespellsmaster #kalajaduspecialist #lovespellsthatwork #aamilbabainlahore#blackmagicformarriage #aamilbaba #kalajadu #kalailam #taweez #wazifaexpert #jadumantar #vashikaranspecialist #astrologer #palmistry #amliyaat #taweez #manpasandshadi #horoscope #spiritual #lovelife #lovespell #marriagespell#aamilbabainpakistan #amilbabainkarachi #powerfullblackmagicspell #kalajadumantarspecialist #realamilbaba #AmilbabainPakistan #astrologerincanada #astrologerindubai #lovespellsmaster #kalajaduspecialist #lovespellsthatwork #aamilbabainlahore #blackmagicforlove #blackmagicformarriage #aamilbaba #kalajadu #kalailam #taweez #wazifaexpert #jadumantar #vashikaranspecialist #astrologer #palmistry #amliyaat #taweez #manpasandshadi #horoscope #spiritual #lovelife #lovespell #marriagespell#aamilbabainpakistan #amilbabainkarachi #powerfullblackmagicspell #kalajadumantarspecialist #realamilbaba #AmilbabainPakistan #astrologerincanada #astrologerindubai #lovespellsmaster #kalajaduspecialist #lovespellsthatwork #aamilbabainlahore #Amilbabainuk #amilbabainspain #amilbabaindubai #Amilbabainnorway #amilbabainkrachi #amilbabainlahore #amilbabaingujranwalan #amilbabainislamabad
Resume
• Real GDP growth slowed down due to problems with access to electricity caused by the destruction of manoeuvrable electricity generation by Russian drones and missiles.
• Exports and imports continued growing due to better logistics through the Ukrainian sea corridor and road. Polish farmers and drivers stopped blocking borders at the end of April.
• In April, both the Tax and Customs Services over-executed the revenue plan. Moreover, the NBU transferred twice the planned profit to the budget.
• The European side approved the Ukraine Plan, which the government adopted to determine indicators for the Ukraine Facility. That approval will allow Ukraine to receive a EUR 1.9 bn loan from the EU in May. At the same time, the EU provided Ukraine with a EUR 1.5 bn loan in April, as the government fulfilled five indicators under the Ukraine Plan.
• The USA has finally approved an aid package for Ukraine, which includes USD 7.8 bn of budget support; however, the conditions and timing of the assistance are still unknown.
• As in March, annual consumer inflation amounted to 3.2% yoy in April.
• At the April monetary policy meeting, the NBU again reduced the key policy rate from 14.5% to 13.5% per annum.
• Over the past four weeks, the hryvnia exchange rate has stabilized in the UAH 39-40 per USD range.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
NO1 Uk Rohani Baba In Karachi Bangali Baba Karachi Online Amil Baba WorldWide...Amil baba
Contact with Dawood Bhai Just call on +92322-6382012 and we'll help you. We'll solve all your problems within 12 to 24 hours and with 101% guarantee and with astrology systematic. If you want to take any personal or professional advice then also you can call us on +92322-6382012 , ONLINE LOVE PROBLEM & Other all types of Daily Life Problem's.Then CALL or WHATSAPP us on +92322-6382012 and Get all these problems solutions here by Amil Baba DAWOOD BANGALI
#vashikaranspecialist #astrologer #palmistry #amliyaat #taweez #manpasandshadi #horoscope #spiritual #lovelife #lovespell #marriagespell#aamilbabainpakistan #amilbabainkarachi #powerfullblackmagicspell #kalajadumantarspecialist #realamilbaba #AmilbabainPakistan #astrologerincanada #astrologerindubai #lovespellsmaster #kalajaduspecialist #lovespellsthatwork #aamilbabainlahore#blackmagicformarriage #aamilbaba #kalajadu #kalailam #taweez #wazifaexpert #jadumantar #vashikaranspecialist #astrologer #palmistry #amliyaat #taweez #manpasandshadi #horoscope #spiritual #lovelife #lovespell #marriagespell#aamilbabainpakistan #amilbabainkarachi #powerfullblackmagicspell #kalajadumantarspecialist #realamilbaba #AmilbabainPakistan #astrologerincanada #astrologerindubai #lovespellsmaster #kalajaduspecialist #lovespellsthatwork #aamilbabainlahore #blackmagicforlove #blackmagicformarriage #aamilbaba #kalajadu #kalailam #taweez #wazifaexpert #jadumantar #vashikaranspecialist #astrologer #palmistry #amliyaat #taweez #manpasandshadi #horoscope #spiritual #lovelife #lovespell #marriagespell#aamilbabainpakistan #amilbabainkarachi #powerfullblackmagicspell #kalajadumantarspecialist #realamilbaba #AmilbabainPakistan #astrologerincanada #astrologerindubai #lovespellsmaster #kalajaduspecialist #lovespellsthatwork #aamilbabainlahore #Amilbabainuk #amilbabainspain #amilbabaindubai #Amilbabainnorway #amilbabainkrachi #amilbabainlahore #amilbabaingujranwalan #amilbabainislamabad
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
Pre-Qualification: Determine your eligibility and the amount you can borrow.
Property Search: Look for properties in eligible rural or suburban areas.
Loan Application: Submit your application, including financial and personal information.
Processing and Approval: The lender and USDA will review your application. If approved, you can proceed to closing.
USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
how to sell pi coins in all Africa Countries.DOT TECH
Yes. You can sell your pi network for other cryptocurrencies like Bitcoin, usdt , Ethereum and other currencies And this is done easily with the help from a pi merchant.
What is a pi merchant ?
Since pi is not launched yet in any exchange. The only way you can sell right now is through merchants.
A verified Pi merchant is someone who buys pi network coins from miners and resell them to investors looking forward to hold massive quantities of pi coins before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to sell pi coins on Bitmart crypto exchangeDOT TECH
Yes. Pi network coins can be exchanged but not on bitmart exchange. Because pi network is still in the enclosed mainnet. The only way pioneers are able to trade pi coins is by reselling the pi coins to pi verified merchants.
A verified merchant is someone who buys pi network coins and resell it to exchanges looking forward to hold till mainnet launch.
I will leave the telegram contact of my personal pi merchant to trade with.
@Pi_vendor_247
how to sell pi coins effectively (from 50 - 100k pi)DOT TECH
Anywhere in the world, including Africa, America, and Europe, you can sell Pi Network Coins online and receive cash through online payment options.
Pi has not yet been launched on any exchange because we are currently using the confined Mainnet. The planned launch date for Pi is June 28, 2026.
Reselling to investors who want to hold until the mainnet launch in 2026 is currently the sole way to sell.
Consequently, right now. All you need to do is select the right pi network provider.
Who is a pi merchant?
An individual who buys coins from miners on the pi network and resells them to investors hoping to hang onto them until the mainnet is launched is known as a pi merchant.
debuts.
I'll provide you the Telegram username
@Pi_vendor_247
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...
Reaching for hedge funds in a VUCA world
1. July 2018
VUCA is an acronym, first used in 1987, to describe or reflect on the volatility, uncertainty,
complexity and ambiguity of general conditions and situations. More recently VUCA became
well known through its use by the American Military to describe extreme conditions of
modern warfare.
Access to alternative sources of return is no longer only for the elite. Since 2016 the majority of South
African hedge funds have transitioned to be regulated under the Collective Investment Schemes
Control Act (CISCA). Under the new regulation hedge funds are structured the same way as traditional
unit trust funds and the products are overseen by the Financial Sector Conduct Authority. But hedge
fund strategies remain diverse and aim for various outcomes; different hedge funds are able to be
both a diversifying and return generating component in a portfolio. An investment in a fund of hedge
funds diversifies exposure across a number of expertly selected hedge funds and can provide the
investor with a suitable outcome to complement their traditional portfolio.
We investigate three areas, namely return, predictability of outcome and downside protection to
demonstrate the value that can be added through an alternative source of return. In order to conduct
this analysis, the after-fees fund of hedge fund track record of THINK.CAPITAL’s portfolio manager
is used as a representative Hedge Fund Solution*.
Introducing the hedge fund return profile
Each marker on the graph in Figure 1 represents the five-year annualised risk and return
characteristics of cash (STeFI Composite Index), bonds (All Bond Index) and equities (JSE All Share
Index TR) as asset classes and all the funds in three specific ASISA categories. The farther the
marker is to the left, the lower the risk (represented by volatility) and the higher the marker, the greater
the return generated over the period.
Reaching for Hedge Funds in a VUCA World
Elmien Wagenaar & Kobus Jansen van Vuuren
2. July 2018
The Hedge Fund Solution presents itself as a superior source of returns to
bonds while also outperforming the vast majority of ASISA General Equity and
ASISA Multi-Asset High Equity classified funds.
Over the past five years the Hedge Fund Solution provided investors with a return of 10.10% per
annum after all fees. This is less than a percent lower than the return of equities of 11.05% per annum
and 2.71% per annum higher than bonds, both at significantly lower risk.
Despite the slight underperformance of the equity index, the Hedge Fund Solution positioned itself
with a considerably better return outcome than the vast majority of its traditional counterparts across
both the General Equity and Multi-Asset High Equity categories. Although it also invests in equities
and bonds, an alternative return profile is created by using additional sources of return such as
shorting, that are only available to hedge funds. The ability to profit from a view that a specific
company is overvalued, increases the investment opportunities of a hedge fund. This can significantly
boost returns while reducing sensitivity to overall market movements at the same time. In this way,
the right combination of hedge funds and equities can complement each other well.
0%
5%
10%
15%
20%
25%
0% 5% 10% 15% 20% 25%
Returnpa
Risk pa
Figure 1: Annualised Risk & Return of a Hedge Fund Solution vs other
Asset Classes and Traditional Unit Trust Funds
1 Jul 2013 - 30 Jun 2018
ASISA Global General Equity ASISA General Equity ASISA MA High Equity
JSE All Share Index TR Hedge Fund Solution All Bond Index
STeFI Composite Index
Sources: THINK.CAPITAL, Realfin Fund Services, Morningstar
1
3. July 2018
The inclusion of the Hedge Fund Solution in a portfolio increases the likelihood
of investors achieving their expected returns, by reducing fluctuations in return.
It is inadequate to consider return alone when determining the potential and subsequent success of
an investment. There are inherent risks to every investment and one needs to question whether
returns generated are sufficient to justify the risks taken. Volatility aims to provide an indication of the
nature of returns by quantifying the frequency and severity with which the return of an investment
fluctuates.
Investigating historic return and volatility of asset classes allows a comparison to be made between
the characteristics one should expect from investments in each. The graphs in Figure 2 shows how
the manifested risk and return of the Hedge Fund Solution varied over any twelve-month period since
December 2003 by plotting each rolling twelve-month risk and return observed. The first graph
compares this variability to that of bonds and showcases that bonds have a greater variation in risk
suffered, but interestingly indicates that bond investors did not receive the additional compensation
one might expect when tolerating higher volatility. The graph shows that in the vast majority of cases
the Hedge Fund Solution was able to provide similar or far superior compensation for the severity of
return fluctuation endured by the investor.
The second of these graphs shows the contrasting characteristics of the Hedge Fund Solution and
equities. While the Hedge Fund Solution was able to provide clients with much more predictable
return and volatility across massively different market conditions since January 2003, the wildly
scattered equity markers speak to a significantly higher uncertainty of risk and return that is
characteristic of equities and will be experienced by its investors over time.
These graphs highlight the importance of correctly balancing one’s expectations from investments in
different asset classes and makes a strong case for the inclusion of hedge funds. It serves as a lower
risk component to a well-diversified portfolio, that brings additional sources of return, while also
exhibiting the ability to act as a solid generator of predictable returns.
2
4. July 2018
-20%
0%
20%
40%
60%
0% 5% 10% 15% 20% 25% 30%
Returnpa
Risk pa
Figure 2: Asset Class Risk-Profile Consistency
Rolling 12-month Risk & Returns: 31 Dec 2003 - 30 Jun 2018
Hedge Fund Solution
All Bond Index
-60%
-40%
-20%
0%
20%
40%
60%
80%
0% 5% 10% 15% 20% 25% 30%
Returnpa
Risk pa
Hedge Fund Solution
JSE All Share Index TR
Sources: THINK.CAPITAL, Realfin Fund Services, Morningstar
5. July 2018
The Hedge Fund Solution delivers strong downside protection during times of
stress.
During times of heightened equity volatility, the losses incurred by a portfolio exposed to equities can
be severe. This typically impacts the long-term prospects of the portfolio and often introduces
behavioural responses by client that can be to the further detriment of the investor’s portfolio. To this
end, downside protection during times of stress becomes vitally important.
Figure 3 displays the ten worst monthly losses of equities over the past five years, with the
corresponding returns of the Hedge Fund Solution. Apart from suffering a similar loss in January
2016, the Hedge Fund Solution was able to very effectively protect investors’ capital, and on multiple
occasions generated positive returns over these extreme downmarket months. The inclusion of the
Hedge Fund Solution would have improved portfolio robustness and buffered client experience.
Conclusion
Strong equity index returns and uncharacteristically mild volatility experienced during 2017 seemingly
removed the usual reminder of the ever-present equity market risk and thus diminished the perceived
need for an alternative source of return able to mitigate this risk. However, currently many investors
find themselves in a position where they are forced to interrogate the reasonability of assuming that
the 2017 market experience will be repeated.
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-2%
-1%
0%
1%
2%
3%
Mar
2018
May
2015
Nov
2015
Aug
2015
Jun
2017
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2018
Feb
2017
Jun
2016
Jan
2016
Sep
2014
MonthlyReturn
Figure 3: Ten Worst JSE Monthly Losses
1 Jul 2013 - 30 Jun 2018
JSE All Share Index TR Hedge Fund Solution
3
Sources: THINK.CAPITAL, Realfin Fund Services, Morningstar
6. July 2018
The prospect of US interest rates normalising after ten years of compression has led to the aggressive
derating of many shares this year. Also, a possibly lengthy trade war between the US and China was
entered into with both countries imposing tariffs on imports. The global impact of this may be severe
and the market has tried to digest the result on profitability of many companies and local bonds have
displayed drawdowns too.
The undeniable global macroeconomic step change warrants a re-think of portfolio construction for
the next investment cycle. The regulation of hedge funds presents an additional tool previously not
available to the retail investor that can act as a component of greater certainty in a portfolio cognisant
of a VUCA world.
*Elmien Wagenaar (Analyst from 2002-2004, co-manager 2005, portfolio manager 2006 – present)
Referees
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