Sections

Hedge funds will lower VaR - Watson Wyatt

IRELAND- Hedge funds produce lower returns than equities but cut risks according to a senior figure at Watson Wyatt in Ireland.

“ We’d expect to get lower returns from hedge funds than equity but also lower value-at-risk” said Joseph O’ Dea, senior investment consultant in the Dublin practice.

Value-at-risk (VaR) calculates the probability for 95% of outcomes based on historic returns.

“Essentially what I am saying is that more efficient structures reduce your reliance on the active risk premium,” O’Dea told a conference.

Advising a diversified approach, he said hedge funds, private equity and high yield produce “ more bang for your buck” and “a better pay-off” than traditional strategies.

“The days are gone when you can just put in a strategy and then do what everybody else is doing”, he said. “ A dead fish always swims with the tide,” he added.

“ I think your bet needs to be diversified. Why don’t we have more in private equity?”” he asked. “Pension funds seem to be obsessed with liquidity. Why is it necessary to be able to buy shares you can sell tomorrow?”

He added that Watson Wyatt was currently doing a lot of work on “ long term equity mandates of up to ten years.”

Have your say

You must sign in to make a comment

IPE QUEST

Your first step in manager selection...

IPE Quest is a manager search facility that connects institutional investors and asset managers.

  • QN-2503

    Asset class: Equities.
    Asset region: Emerging Markets.
    Size: EUR 30m.
    Closing date: 2019-01-31.

  • QN-2505

    Asset class: Real Estate Core/Core-Plus Multi-sector strategy.
    Asset region: Asia-Pacific.
    Size: $ 50m.
    Closing date: 2019-01-28.

  • QN-2506

    Asset class: Currency Overlay.
    Asset region: Global.
    Size: USD 4 bn..
    Closing date: 2019-02-11.

Begin Your Search Here