Long only hedge fund
Long only hedge fund? Brand extension is smart but brand destruction is not. What if Ferrari entered the horse and cart industry, Apple manufactured tape recorders and Google started delivering snail mail? Investors want absolute returns, risk management and innovation. Hedging requires short selling.
I invest in alpha gatherers NOT asset gatherers. As a rule I have pension clients automatically redeem or avoid if a hedge fund firm also attempts to run or start a long only product. Unnecessary distraction that betrays their firm as at best unfocused, worst not committed to short/long strategies.
By definition most hedge funds cannot be long only. Unless a manager is able to generate absolute returns INDEPENDENTLY of underlying beta risk factors and asset class up moves then it is not a hedge fund. No hedging is risky for long term investors seeking consistent absolute returns not unreliable relative returns.
A good hedge fund either hedges or acts as a portfolio hedge. Strategies like short only and distressed debt, for example, do not inherently hedge themselves but perform as a portfolio hedge. However it is highly unlikely that a long only equity or credit fund can achieve returns independent of their underlying asset class. They must manage risk and that means having short sales and hedging with derivatives.
Short selling doesn't actually need to be profitable; it is about REDUCING market exposure. Generating alpha is the function of real hedge funds not repackaging beta.
I invest in alpha gatherers NOT asset gatherers. As a rule I have pension clients automatically redeem or avoid if a hedge fund firm also attempts to run or start a long only product. Unnecessary distraction that betrays their firm as at best unfocused, worst not committed to short/long strategies.
By definition most hedge funds cannot be long only. Unless a manager is able to generate absolute returns INDEPENDENTLY of underlying beta risk factors and asset class up moves then it is not a hedge fund. No hedging is risky for long term investors seeking consistent absolute returns not unreliable relative returns.
A good hedge fund either hedges or acts as a portfolio hedge. Strategies like short only and distressed debt, for example, do not inherently hedge themselves but perform as a portfolio hedge. However it is highly unlikely that a long only equity or credit fund can achieve returns independent of their underlying asset class. They must manage risk and that means having short sales and hedging with derivatives.
Short selling doesn't actually need to be profitable; it is about REDUCING market exposure. Generating alpha is the function of real hedge funds not repackaging beta.
© posted by Hedge Fund on 11:33 AM
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