In The News
Understanding volatility, leverage and liquidity and knowing how these factors together can compound risk, can help investors know what they own and how it behaves. Ongoing due diligence, manager monitoring, and stress testing and projections with various scenarious can also help avoid unpleasant surprises.
Large endowments and wealthier investors have the funding available to hire staffers who understand the complexities of alternative investments. Good returns on alternative investments, which include hedge funds and private equity, are mostly borne out of a commitment to due diligence.
Ask the questions and then trust your gut instinct, say the authors of Greenwich Roundtable White Paper.
People buy nontraditional assets to diversify their stock and bond portfolios, the goal being to lower volatility, lessen losses and improve overall results. Some invest in gold or currencies, or put their money in real estate. But these don't usually act like stocks and bonds and cash equivalents, the traditional investor assets.
Steve McMenamin, executive director of the Greenwich Roundtable, and Aleks Weiler, portfolio manager of the Canadian Pension Plan Investment Board, discuss the hedge fund industry with CNBC.
The economic collapse of 2008 revealed a fundamental truth in investing in alternatives-- that talent among managers is still rare.
There are two keys to building a successful portfolio of alternative investment managers: Know where you are playing, and wait for and collect the best quality managers. There are many painters, but few Picassos. Article published in Asset International 5000.
