In order to apply this portfolio driven approach, we must understand the connection between a hedge fund manager’s investment process, their performance, and the markets. Or in other words, understanding the complex and unique mix of correlations and risk factors present in every hedge fund.
Assembling this knowledge requires specialised investment staff, rigorous research and analysis, and strong analytical capabilities. With this knowledge, however, comes the ability to apply sophisticated portfolio construction techniques to maximise performance and produce new return streams that meet specific investor needs.
Not only is this knowledge critical for proper portfolio construction, it also enhances our ability to identify the best hedge fund managers and investment opportunities that will deliver the highest quality solutions and results.