The inconsistency of the performances recorded by the financial markets for several years has led management professionals to implement new management techniques for their portfolios decorrelation performance of markets and their indices.
It is in this context that alternative management. The latter is a set of technical and financial strategies varied. Management is not entirely new. It was simply because it was democratized long reserved to financial institutions, pension funds and sometimes very large estates.
The objective of hedge funds is to achieve a level of absolute performance, preferably stable, disconnected from the general trend of the market while minimizing risk.
As part of managing a financial portfolio, two possibilities are available to asset managers and their clients.
- The first possibility would be to subscribe for shares or units of Undertaking for Collective Investment in Transferable Securities (SICAV and FCP).
Many funds do have in place to manage the funds entrusted by investors to hedge various techniques.
The asset manager and client must still observe (but classic) performance on a relatively consistent time scale to ensure the regularity of the fund’s performance.
- The second option offered by a hedge fund asset manager in operating some of his alternative techniques to make direct application on behalf of clients. For example, one of these techniques is the Market Neutral.
The market neutral to decorrelation will consist of the development of an index. To do so, the manager and / or his client will be a buyer and seller underlying another underlying. The problem of the investor is then to identify what is the value that will grow the most if the market goes up and what is the value that will fall the least if the market declines. Much of the analysis, therefore while the choice of securities purchased and sold.
Using this technique requires the use of market-neutral variety of techniques to identify market trends and values ??chosen, but also a more fundamental reflection on the evolution of selected titles.
The essential quality of hedge funds is its ability to withstand market downturns. In this context, the use of hedge funds or the solicitation of a few alternative techniques is recommended as part of a diversification of assets or phase of difficult financial markets.
