thank you

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Posted by JR on November 06, 2009 at 16:14:04:

In Reply to: Alternative investment funds for the rest of us (lip) posted by Fundmentals on November 06, 2009 at 15:41:15:

i'll keep the list. and might even use it if i decide to shake off my laziness.

it looks like what you're trying to do for yourself is exactly what we are trying to do for our investors -- find a diversified portfolio that will beat inflation over the cycle (7-10 years?) and offer assymetic returns: capture most of the upside, but better protect on the downside. we launched a cayman vehicle (okay, a hedge fund of funds, lol) on 1/1/08 - a perfect date to get crashed. and, of course lost some in 2008, but gain nicely this year -- steadily -- and almost made our 1/1/08 investor whole (if not for the fr'n lehman freezing some of our assets!), but even with that write down! this was achieved with beta between zero and .3 and very low leverage.

so it is indeed possible but very difficult to achieve when correlation suddenly goes to 1 for most of the assets and we get a fresh policy which prevents a half of trading universe from shorting -- driving market neutral managers to reduce their short side during the time of the crash.

i guess the guys here are right that for the black birdy - gold and cash are kings. all sort of invested assets will be at risk. in a way it's a good lesson that i lived through 2008 being fairly young. this experience will shape a lot of my future investment decision making.

: The discussion below on the merger/arbitrage funds prompted me to post this list I found of someone who has done the research to list funds that have active/alternate investment strategies.

: These are not the alternative investments that pension funds and endowments went chasing after (although in their case it was the non-liquidity of the asset classes they invested in that hurt them more than the invalidity of the investment strategies itself).

: Such funds can play a part in a portfolio or part of a portfolio designed to optimize risk-managed returns with downside protection which usually means that they will lag in bull markets but preserve capital in bear markets. When properly diversified with a traditional asset allocation portfolio, they can provide stability and downside protection while not being constrained to diversified-bond like returns. It is important to diversify amongst them so you are not overexposed to strategy risks and idiosyncratic manger risks.

: I have not looked at all the funds in this list so am not making recommendations for/against any specific fund there with this list.

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Comments: : i'll keep the list. and might even use it if i decide to shake off my laziness. : it looks like what you're trying to do for yourself is exactly what we are trying to do for our investors -- find a diversified portfolio that will beat inflation over the cycle (7-10 years?) and offer assymetic returns: capture most of the upside, but better protect on the downside. we launched a cayman vehicle (okay, a hedge fund of funds, lol) on 1/1/08 - a perfect date to get crashed. and, of course lost some in 2008, but gain nicely this year -- steadily -- and almost made our 1/1/08 investor whole (if not for the fr'n lehman freezing some of our assets!), but even with that write down! this was achieved with beta between zero and .3 and very low leverage. : so it is indeed possible but very difficult to achieve when correlation suddenly goes to 1 for most of the assets and we get a fresh policy which prevents a half of trading universe from shorting -- driving market neutral managers to reduce their short side during the time of the crash. : i guess the guys here are right that for the black birdy - gold and cash are kings. all sort of invested assets will be at risk. in a way it's a good lesson that i lived through 2008 being fairly young. this experience will shape a lot of my future investment decision making. : : The discussion below on the merger/arbitrage funds prompted me to post this list I found of someone who has done the research to list funds that have active/alternate investment strategies. : : These are not the alternative investments that pension funds and endowments went chasing after (although in their case it was the non-liquidity of the asset classes they invested in that hurt them more than the invalidity of the investment strategies itself). : : Such funds can play a part in a portfolio or part of a portfolio designed to optimize risk-managed returns with downside protection which usually means that they will lag in bull markets but preserve capital in bear markets. When properly diversified with a traditional asset allocation portfolio, they can provide stability and downside protection while not being constrained to diversified-bond like returns. It is important to diversify amongst them so you are not overexposed to strategy risks and idiosyncratic manger risks. : : I have not looked at all the funds in this list so am not making recommendations for/against any specific fund there with this list.

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Comments:	: i'll keep the list. and might even use it if i decide to shake off my laziness. : it looks like what you're trying to do for yourself is exactly what we are trying to do for our investors -- find a diversified portfolio that will beat inflation over the cycle (7-10 years?) and offer assymetic returns: capture most of the upside, but better protect on the downside. we launched a cayman vehicle (okay, a hedge fund of funds, lol) on 1/1/08 - a perfect date to get crashed. and, of course lost some in 2008, but gain nicely this year -- steadily -- and almost made our 1/1/08 investor whole (if not for the fr'n lehman freezing some of our assets!), but even with that write down! this was achieved with beta between zero and .3 and very low leverage. : so it is indeed possible but very difficult to achieve when correlation suddenly goes to 1 for most of the assets and we get a fresh policy which prevents a half of trading universe from shorting -- driving market neutral managers to reduce their short side during the time of the crash. : i guess the guys here are right that for the black birdy - gold and cash are kings. all sort of invested assets will be at risk. in a way it's a good lesson that i lived through 2008 being fairly young. this experience will shape a lot of my future investment decision making. : : The discussion below on the merger/arbitrage funds prompted me to post this list I found of someone who has done the research to list funds that have active/alternate investment strategies. : : These are not the alternative investments that pension funds and endowments went chasing after (although in their case it was the non-liquidity of the asset classes they invested in that hurt them more than the invalidity of the investment strategies itself). : : Such funds can play a part in a portfolio or part of a portfolio designed to optimize risk-managed returns with downside protection which usually means that they will lag in bull markets but preserve capital in bear markets. When properly diversified with a traditional asset allocation portfolio, they can provide stability and downside protection while not being constrained to diversified-bond like returns. It is important to diversify amongst them so you are not overexposed to strategy risks and idiosyncratic manger risks. : : I have not looked at all the funds in this list so am not making recommendations for/against any specific fund there with this list.
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