Filed Under (Hedge Funds) by Admin on 19-03-2010
High frequency trading? Ironic the best long term returns came from short term strategies. Like most people my favorite holding period is forever. In reality it is rarely feasible and never optimal when economic volatility, creative destruction, business innovation and global instability are permanent market phenomena. The emerging markets post was on SPACE - people should invest in good opportunities anywhere. This is about TIME - buy and hold and low frequency trading do not diversify enough so investors also need higher frequency strategies in their portfolios. Different holding period alphas REDUCE total risk.
Best manager for the new decade? The chances are that fund is not yet in existence though I have visited some interesting startups recently. What about the best strategy? That strategy has likely yet to be invented. However some future trends are certain like the growth of alpha vendor industry AUM from the current tiny $2 trillion to over $10 trillion by 2020. Some $100 billion funds will appear, many not established today. High frequency trading was the best hedge fund category in the 2000s but it will NOT be the winner again with so many entering the field dragging down “aggregate” returns. The obscure is now mainstream but the top funds will thrive extracting alpha out of high frequency has-beens and wannabes.
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Filed Under (Hedge Funds) by Admin on 19-03-2010
High frequency trading? Ironic that the best long term returns came from short term strategies. Like most people my favorite holding period in theory is forever. In reality it is rarely feasible and never optimal when economic volatility, creative destruction, business innovation and global instability are permanent market phenomena. The previous post was on SPACE - people should invest in good alpha opportunities anywhere. This post is about TIME - buy and hold and low frequency trading do not diversify enough so investors also need higher frequency strategies in their portfolios. Different holding period alphas REDUCE total risk.
Best fund manager for this new decade? The chances are that fund is not yet in existence though I have visited some interesting start ups recently. What about the best strategy? That strategy has likely yet to be invented. However some future trends are certain like the growth of the alpha vendor industry AUM from the currently tiny $2 trillion to at least $10 trillion by 2020. Some $100 billion funds will appear, many not established today. High frequency trading was the best hedge fund category in the 2000s and it will NOT be the winner again with so many entering the field dragging down “aggregate” returns. The obscure field is now mainstream but the top exponents will thrive extracting alpha out of the many more high frequency wannabes.
Read the rest of this entry »
