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Albourne’s Senior Analyst and Partner Ronan Cosgrave was recently interviewed by Bloomberg’s Odd Lots Podcast.
Join Joe Weisenthal and Tracy Alloway as they delve into the Multi-Strategy space:
Why Asset Allocators Love Multi-Strategy Funds - Odd Lots Podcast
They ask:
- What is the reason that Multi-Strategy Hedge Funds are so popular?
- Can they keep being an ever-increasing part of the overall Hedge Fund market?
- What is netting risk and what does it mean for the structure of the fund and manager behavior?
- What does the compensation system mean for investors and fund managers?
Ronan discusses key considerations, including:
- It is important to remember that when there are performance fees involved, diversification is no longer a free lunch. The cost to diversify is called netting risk.
- Typically, Multi-Strategy funds present investors with a choice between a focus on talent and structure.
- A structural focus on risk management and investment process means that PMs are made to produce risk and returns that suit the overall portfolio and not maximize their own payoff.
- A focus on talent tends to let PMs maximize their own utility, often at the expense of maximizing their use to the overall portfolio.
Further details on the complexities of Multi-Strategy fund structures can be read in this white paper, for clients and prospects.
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