Liquid Alternatives: “A Diverse Range Of Strategies That Can Zig When The Market Zags”

July 6, 2022 | Liquid Alternatives, News
https://dailyalts.com/wp-content/uploads/2022/07/business-gc7f881533_640.jpg

Key takeaways from an interview with Morningstar’s Francesco Paganelli, European expert for liquid alternatives.

Lukas Strobl, editorial manager for EMEA at Morningstar, interviews Francesco Paganelli. The topic: Liquid alternatives as a “hedge fund-lite” kind of strategy.

Francesco Paganelli:

  • Alternative funds are those that primarily attempt to modify, diversify, expand, or even eliminate the dominant risk factors that typically drive traditional asset classes.
  • Within alternatives, the liquid alternative space comprises a diverse range of strategies that can zig when the market zags by employing different techniques.
  • Examples: shorting, exotic instruments, non-correlation, relative value, and systematic trend – strategies generally used by hedge funds, or – “hedge fund-lite”
  • Why “liquid?” – these are alternative strategies offered in a mutual fund wrapper with daily liquidity – a way for anyone to access sophisticated strategies
  • Liquid alternatives are a Global Financial Crisis phenomenon
  • Investors sought a solution to diversify their portfolio amidst the 2008 meltdown
  • What is the right fund or strategy for you? That depends on your goals, preferences, skill set, and risk appetite. But liquid alternatives may not be for everyone
  • Risk: A portfolio can be seen as a collection of risk exposures that interact with each other and what’s really critical is to determine what risk you have and decide which ones you want to keep, which ones you want to mitigate, which ones you want to diversify away from? That should help selection of the fund or strategy.
  • [2022] Best performing strategy of the year so far: Systematic trend, which can be described as going long markets that are rising in price and going short markets that are falling in price. (Booming commodity prices and meltdown in the bond market).
  • What to watch for: Complexity, leverage, steep fees, and therefore, the crucial selection of a manager.

Related Story: Liquid Alternatives: Three Reasons

Free Industry News

Subscribe to our free newsletter for updates and news about alternatives investments.

  • This field is for validation purposes and should be left unchanged.


Shape

Latest Alternative Investment News

https://dailyalts.com/wp-content/uploads/2023/12/AMD_headquarters_santa_clara.624da707519a6.jpg
Artificial Intelligence: AMD Takes On Rivals In The AI Chip Sweepstakes
December 7, 2023     Artificial Intelligence, News

Chipmaker AMD (NASDAQ: AMD) has unveiled a range of innovative AI solutions spanning from data centers to personal computers. The AMD Instinct MI300 Series features data center AI accelerators, while…

https://dailyalts.com/wp-content/uploads/2023/12/RHCEU-Inline.jpg
Digital Assets: Robinhood Debuts Crypto Trading On Its App In The EU
December 7, 2023     Digital Assets, FinTech, News

Robinhood (NASDAQ: HOOD) has launched its Crypto app in the European Union (EU), allowing eligible customers to engage in crypto trading with the added incentive of earning Bitcoin rewards. Customers…

https://dailyalts.com/wp-content/uploads/2023/12/Samsung_UK_Samsung_Pay_Lifestyle_0552-revised-Pictogram-23.11.30-1024x744-1.png
FinTech: Samsung Electronics Ties With Mastercard’s Wallet Express
December 7, 2023     FinTech, News

Samsung Electronics (KRX: 005930) and Mastercard (NYSE: MA) have partnered to launch the Wallet Express program, offering banks and card issuers a cost-effective way to expand digital wallet offerings. Through…

https://dailyalts.com/wp-content/uploads/2023/12/Revaia-founders.jpg
Venture Capital: Revaia, Europe’s Biggest Female-Led VC Firm, Racks Up $160M For Second Fund
December 7, 2023     ESG and Sustainability, News, Venture Capital

Revaia, Europe’s largest female-founded venture capital firm, has successfully raised €150 million ($160 million) for its second fund, Revaia Growth II. The funding was secured from sovereign wealth funds, family…