Alternative Beta Shop Offers Hedging Strat For FoFs

Apr 11 2008 | 2:00am ET

Stonebrook Capital Management has launched a proprietary hedging strategy for fund of hedge funds managers to help them keep their heads above water in volatile markets.

Developed by Jerome Abernathy, chief investment officer, and Ahmad Ajakh, director of research, the strategy is the culmination of more than five years of research on the relationship between market conditions and hedge fund returns. Abernathy said the strategy seeks risk contagion periods such as January’s equity sell-off and buys flight-to-quality instruments, such as Treasuries, while selling off risky assets including small-caps and emerging markets, and leaves those positions on until the risk contagion starts to subside.

“When you do this, you end up with a strategy with an extremely high correlation to hedge funds, in general, that adds value exactly when you need it,” he said.

The strategy is implemented either through a managed account or special purpose fund. Abernathy said the firm is currently in discussions with a couple of large groups who are interested in the product.   


In Depth

FINtech Focus: Fundbase Aims To Revolutionize Access To Hedge Funds

Jan 23 2015 | 11:03am ET

Global investment in financial technology—also known as fintech—is booming....

Lifestyle

Is Steven Cohen Going to Buy the Brooklyn Nets?

Jan 19 2015 | 6:49am ET

Rumors that Steve Cohen was interested in the Brooklyn Nets emerged after Scott...

Guest Contributor

Investors Benefit From Evolution Of Fund Of Hedge Funds Model

Jan 22 2015 | 12:27pm ET

The evolution of the fund of hedge funds model over the last few years represents...

 

Editor's Note