Hedge Funds Or A Personalised Multi Strategy Investment?
Hedge funds- they've long dominated the landscape of many sophisticated investors portfolios. Traditionally a fund that pools capital from accredited individuals or institutions and invests into a variety of assets, often with complex portfolio construction and risk management techniques- it's a model that works well for many.
In fact, over 3 TRILLION USD is currently invested into worldwide hedgefunds, and most claim to offer an 'absolute' strategy which in simple terms- 'aims to perform well regardless of the market climate'.
However, the statistics suggest otherwise, and some would even suggest that a high proportion of them almost track the markets.
Lane Clark who has designed the 'Multi Strategy Investment' at Cadogan Asset Management provides some insight for us-
'Working in the industry for as long as I have means I've witnessed many funds come and go, but the most successful one's tend to be the funds that have witnessed a plethora of different market climates- yet are still here to tell the tale.
If we're being completely candid, it shouldn't be too complicated to yield a return focusing on 'emerging markets' when the economy worldwide is thriving, or likewise- to profit from a fund offering 'short exposure' to worldwide Indices when the Equity market is down 10% on the year.
What I believe an investor has to pontificate over are funds or strategies that aim to perform regardless of the market climate, funds that aren't reliant on any particular market, or strategy choice, and funds and strategies that veer away from tracking markets, as if the market is negative- your exposure will be likewise.
I fail to understand the stance of fund managers who regularly make comments like 'We're down 7% on the year, but we've out performed our benchmark by 2%'. As far as I'm concerned- 'You're negative. The numbers don't lie'.
I don't trade for direct clients these days, but via my Consultancy I work with multiple Asset Managers, and for one of these Asset Managers, I've designed a 'Multi Strategy Investment' for them which their trading team implement.
Now although I'll be the first to state that there are some excellent hedge funds, and some very skilled managers residing out there, I do ask investors to consider the variables I've already mentioned.
With the Multi Strategy Investment the trading team offer the clientele, they do 'look to perform in any market climate'. It is an 'absolute' strategy.
Having said that- it doesn't mean that the team will be positive every week, month and quarter- they won't be. That much is a fact. Year on year though- I would expect the strategies to deliver.
The Multi Strategy Investment builds a portfolio across 4 markets (FX, Equities, Metals and Energy) utilising 5 technical trading strategies that I believe compliment each other very well.
Therefore, if the portfolios are underperforming in one market class, we would expect them to be delivering elsewhere. If one of the strategies is misfiring, we would hope and expect other performing strategies would mitigate that risk.
What I have tried to create is a diversified, robust portfolio which consists of multiple smaller high probability trades, which both BUY and SELL the markets the trading team provide coverage of.
The team also personalise the offering to every client they work with. The risk/volatility is structured in such a manner that I would hope it compliments the clients existing portfolio. The service is also bespoke to the investor, and we've structured it in a manner that is extremely transparent, and liquid.
In theory, when designing the Multi Strategy Investment, we have attempted to tick as many 'investor boxes' as is possible.
I won't be bold enough to sit and state that we have found the holy grail of investment strategies, and I won't claim that the proposition is superior to any hedge fund offering available to an investor, but I will close by saying to an investor to please always remember the proof will be in the numbers, and when looking for an investment- whilst you have to accept you won't always have positive years, try and accrue as many funds and strategies that aren’t over reliant on any particular market event or strategy, as in the unpredictable world which we are exposed too- you never know what’s around the corner, and you need to protect your portfolio to that fact.
Other Relevant Articles:
https://www.investopedia.com/university/hedge-fund/performance-measurement.asp
For further information on The Multi Strategy Investment at Cadogan Asset Management, Lane Clark’s Consultancy, or Market Commentary please contact Lane on laneclark@non-execdirector.co.uk
Hedge funds- they've long dominated the landscape of many sophisticated investors portfolios. Traditionally a fund that pools capital from accredited individuals or institutions and invests into a variety of assets, often with complex portfolio construction and risk management techniques- it's a model that works well for many.
In fact, over 3 TRILLION USD is currently invested into worldwide hedgefunds, and most claim to offer an 'absolute' strategy which in simple terms- 'aims to perform well regardless of the market climate'.
However, the statistics suggest otherwise, and some would even suggest that a high proportion of them almost track the markets.
Lane Clark who has designed the 'Multi Strategy Investment' at Cadogan Asset Management provides some insight for us-
'Working in the industry for as long as I have means I've witnessed many funds come and go, but the most successful one's tend to be the funds that have witnessed a plethora of different market climates- yet are still here to tell the tale.
If we're being completely candid, it shouldn't be too complicated to yield a return focusing on 'emerging markets' when the economy worldwide is thriving, or likewise- to profit from a fund offering 'short exposure' to worldwide Indices when the Equity market is down 10% on the year.
What I believe an investor has to pontificate over are funds or strategies that aim to perform regardless of the market climate, funds that aren't reliant on any particular market, or strategy choice, and funds and strategies that veer away from tracking markets, as if the market is negative- your exposure will be likewise.
I fail to understand the stance of fund managers who regularly make comments like 'We're down 7% on the year, but we've out performed our benchmark by 2%'. As far as I'm concerned- 'You're negative. The numbers don't lie'.
I don't trade for direct clients these days, but via my Consultancy I work with multiple Asset Managers, and for one of these Asset Managers, I've designed a 'Multi Strategy Investment' for them which their trading team implement.
Now although I'll be the first to state that there are some excellent hedge funds, and some very skilled managers residing out there, I do ask investors to consider the variables I've already mentioned.
With the Multi Strategy Investment the trading team offer the clientele, they do 'look to perform in any market climate'. It is an 'absolute' strategy.
Having said that- it doesn't mean that the team will be positive every week, month and quarter- they won't be. That much is a fact. Year on year though- I would expect the strategies to deliver.
The Multi Strategy Investment builds a portfolio across 4 markets (FX, Equities, Metals and Energy) utilising 5 technical trading strategies that I believe compliment each other very well.
Therefore, if the portfolios are underperforming in one market class, we would expect them to be delivering elsewhere. If one of the strategies is misfiring, we would hope and expect other performing strategies would mitigate that risk.
What I have tried to create is a diversified, robust portfolio which consists of multiple smaller high probability trades, which both BUY and SELL the markets the trading team provide coverage of.
The team also personalise the offering to every client they work with. The risk/volatility is structured in such a manner that I would hope it compliments the clients existing portfolio. The service is also bespoke to the investor, and we've structured it in a manner that is extremely transparent, and liquid.
In theory, when designing the Multi Strategy Investment, we have attempted to tick as many 'investor boxes' as is possible.
I won't be bold enough to sit and state that we have found the holy grail of investment strategies, and I won't claim that the proposition is superior to any hedge fund offering available to an investor, but I will close by saying to an investor to please always remember the proof will be in the numbers, and when looking for an investment- whilst you have to accept you won't always have positive years, try and accrue as many funds and strategies that aren’t over reliant on any particular market event or strategy, as in the unpredictable world which we are exposed too- you never know what’s around the corner, and you need to protect your portfolio to that fact.
Other Relevant Articles:
https://www.investopedia.com/university/hedge-fund/performance-measurement.asp
For further information on The Multi Strategy Investment at Cadogan Asset Management, Lane Clark’s Consultancy, or Market Commentary please contact Lane on laneclark@non-execdirector.co.uk