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Hedge-Fund Strategies Get a Second Wind

By Advisor Perspectives
Hedge Funds


Unpredictable forces of nature such as gusty breezes and swaying tides often trouble recreational skippers when attempting to dock their boats in a crowded harbor. A sudden rush of wind, for instance, could easily catch the bow or stern of a docking boat and blow it past the designated slip.

Seasoned boaters, however, tend to take the elements of wind and sea in stride when coxswaining in marinas. Moving with the flow, they often use the momentum and direction of moving air mass and sea waves to gently steer their vessels into narrow slips.

The idea is to harness or tame the elements in front of you to your advantage, whether it relates to docking a boat or investing. Akin to intermittent wind and tide, which can assist experienced skippers, there are exogenous factors impacting global financial markets which skillful hedge-fund managers can tap in their quest for alpha, which we define as a risk-adjusted measure of the value that an active portfolio manager adds to or subtracts from a portfolio’s return.

Read more at Advisor Perspectives.

Photo: davekeane

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