A Case for Multi Strategy

15 Sep 2023
1 minute read

Key takeaways:

Investors have become familiar with uncertain environments, where asset prices rise or fall in concert with government and central bank monetary policies, or where market sentiment is hit by significant single-factor events (eg. Fukushima, COVID-19, etc).
History shows that periods of acute market stress can cause pricing for otherwise seemingly diversified assets to synchronise. Seemingly unrelated investment strategies can become highly correlated, with the associated risk premia widening across the board.
As we shift from a focus on inflationary fears to growth uncertainty, investors might consider alternative strategies with diversified drivers of performance that are uncorrelated to stocks, both in theory and in practice.

Whatever form it takes, markets remain vulnerable to a sudden global catalyst capable of triggering a potentially significant correction. In this environment, there is a strong argument for investors to adopt a different approach to constructing risk-adjusted, return-seeking portfolios, particularly those heavily reliant on single asset classes. Here, we discuss the key considerations for constructing diversified Multi Strategy portfolios, anchored on a portfolio protection strategy, to help meet investors’ needs – with a particular note on pricing structures.

JHI

Key takeaways:

Investors have become familiar with uncertain environments, where asset prices rise or fall in concert with government and central bank monetary policies, or where market sentiment is hit by significant single-factor events (eg. Fukushima, COVID-19, etc).

History shows that periods of acute market stress can cause pricing for otherwise seemingly diversified assets to synchronise. Seemingly unrelated investment strategies can become highly correlated, with the associated risk premia widening across the board.

As we shift from a focus on inflationary fears to growth uncertainty, investors might consider alternative strategies with diversified drivers of performance that are uncorrelated to stocks, both in theory and in practice.

A Case for Multi Strategy

Key takeaways:

JHI

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