Long only fund
Long only hedge fund? Brand extension is easy but brand destruction is dumb. What if Ferrari entered the horse and cart industry, Apple began manufacturing tape recorders, Amazon opened bookshops on main street and Google started delivering snail mail? Bizarre? Investors seek innovation so why would a TRUE hedge fund manager retreat to archaic long only? No shorts means no hedge. Hedge fund firms that set up long only funds commit commercial suicide.
I'm advising institutions to ALSO avoid long/short products offered by firms that set up long only vehicles. It's just an asset gathering ploy by weak hedge funds that failed at long/short. I've been investing in absolute return strategies for a long time. I never have and never would consider a long only fund. Much too risky for conservative investors. Redeem from "alternatives" firms that try to raise long only money. Such toxic waste has no place in risk averse portfolios with absolute liabilities to pay.
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 direction then it is NOT a hedge fund. Why would a real hedge fund firm destroy its reputation and track record with soon to be obsolete long only? Long only is wrong only. No hedging renders a fund too risky for long term investors that seek absolute returns not 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.
Long only firms may try to run what they say are "hedge funds" and weaker alternative investment shops might attempt to raise long only money but the product separation is distinct. If you are long only you can't be hedged. One fails to manage risk, the other tries to. 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. There is no such thing as a long only hedge fund and never will be.
I'm advising institutions to ALSO avoid long/short products offered by firms that set up long only vehicles. It's just an asset gathering ploy by weak hedge funds that failed at long/short. I've been investing in absolute return strategies for a long time. I never have and never would consider a long only fund. Much too risky for conservative investors. Redeem from "alternatives" firms that try to raise long only money. Such toxic waste has no place in risk averse portfolios with absolute liabilities to pay.
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 direction then it is NOT a hedge fund. Why would a real hedge fund firm destroy its reputation and track record with soon to be obsolete long only? Long only is wrong only. No hedging renders a fund too risky for long term investors that seek absolute returns not 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.
Long only firms may try to run what they say are "hedge funds" and weaker alternative investment shops might attempt to raise long only money but the product separation is distinct. If you are long only you can't be hedged. One fails to manage risk, the other tries to. 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. There is no such thing as a long only hedge fund and never will be.
© posted by Veryan Allen on 03:33
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