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Special Report: Diversification

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Stockholm (HedgeNordic) – We are probably all familiar with the saying “when one door closes, another door opens.” It is generally seen as quite an optimistic encouragement not to give up or feel beat down about a setback as other opportunities become available after one has been eliminated. When you’re no longer able to pursue one possibility, your mind is free to pursue a different one. The phrase is typically credited to Alexander Graham Bell, who did make it popular. In actuality, the first written mention of the phrase is in a Spanish novella published in 1554 by an anonymous author. Miguel de Cervantes used it too in “Don Quixote” in 1605.

The full quote by Alexander Graham Bell is more extensive: “When one door closes another door opens; but we often look so long and so regretfully upon the closed door that we do not see the one which has opened for us.” The over-optimist in me would go a step further. The existence of a door in a solid brick wall is already a great relief! It means there actually is a designed way through the obstacle that would otherwise be impossible to overcome. And if the door is locked, it only means that there IS a lock, and somewhere there IS a key to unlock it! The “closed door” metaphor is quite easily transferable to the world of finance.

If one market, stock, one currency swap or one straddle does not work out for you, there are plenty other doors to pass through that may grant the opportunities you were seeking. The hedge fund space then has the additional advantage that doors are no one-way passage, but you can use them to go in and out – or, long and short in financial lingo. While publicly traded markets offer ever-increasing possibilities, markets and instruments, including private markets to the scope opens an entirely new universe.

Until not too long ago, such markets generally were exclusively reserved for very large institutional investors who had the deep pockets and could also handle to illiquidity that often comes along with such transactions. An ever-increasing democratization is taking place and now assets such as private equity, private debt, infrastructure, agricultural land and forestry, to name a few, are opening up to smaller institutions and, indeed, the private investor. Next to giving opportunities for additional return drivers, the most important argument for such investments certainly is that these are typically uncorrelated assets that allow for further portfolio diversification. In this special report, we will look at various doorways that may lead to opportunities to generate returns, but mainly the various paths and instruments that should contribute to diversifying portfolios.

Hamlin Lovell’s editorial “Portfolio Diversification Through Private Assets” gives us a nice introduction into the matter. Michael Lindauer, CIO of Private Equity – Allianz Capital Partners (ACP), talks about the “Diversification and Spice” an allocation to private equity can bring. Luis García Álvarez, Portfolio Manager of the MAPFRE AM Behavioral Fund, describes how he aims for a “Unique Portfolio as a Source of Diversification” through his investments in listed football clubs, while Jonas Mårtenson of Ress Capital is convinced their strategy investing is US life settlements creates a “Positively Skewed Fixed-Income Alternative.”

Dirk Holz, the head of private capital services at RBC Investor & Treasury Services, is “Zooming in on Retail Investors” and Thomas Raaschou, the CEO of NOMA Capital, and Christian Björkman, the CEO at Nordic Tech Fund Group, highlight why they believe we are in “Great Times for Tech Start-Ups.”

Looking into the merits of investment and diversification potential from the oldest asset – gold – to the newest – cryptocurrencies, we have lined up two editorials. Ned Naylor-Leyland, Head of Strategy, Gold & Silver at Jupiter Asset Management, along with Anna Svahn, the founder and CEO of Antiloop Hedge, along with precious metals specialist Eric Strand, the founder of AuAg Funds, discuss “Gold – Hedge, Safe Haven, or Diversifier?” “The Role of Cryptos in a Diversified Portfolio” is analyzed by hedge fund veteran Martin Estlander of Estlander & Partners and Niclas Sandstrom, the CEO of Hilbert Group and Anna Svahn of Antiloop Hedge, along with Mikkel Morch from ARK36.

Niels Kaastrup-Larsen from TopTradersUnplugged and Richard Brennan from ATS Trading Solutions elaborate on “An Alternative to the Classic 60/40 Portfolio.” The paper is rounded off by looking into “Nordic Institutions Embracing Private Markets.”

We do hope you enjoy the paper and discover some interesting reads. The direct link to the report is

HERE

or please feel free to page through it below.

 

Title Pic by: Tatyana Vyc—shutterstock.com

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Kamran Ghalitschi
Kamran Ghalitschi
Kamran has been working in the financial industry since 1994 and has specialized on client relations and marketing. Having worked with retail clients in asset management and brokerage the first ten years of his career for major European banks, he joined a CTA / Managed Futures fund with 1,5 Billion USD under management where he was responsible for sales, client relations and operations in the BeNeLux and Nordic countries. Kamran joined a multi-family office managing their own fund of hedgefunds with 400 million USD AuM in 2009. Kamran has worked and lived in Vienna, Frankfurt, Amsterdam and Stockholm. Born in 1974, Kamran today again lives in Vienna, Austria.

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