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

AIMA: Smaller Firms Remain the Lifeblood of the Hedge Fund Industry

Jul 26 2017 | 5:55pm ET

It is a hedge fund industry truism that the largest managers receive the most attention...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

Rastegar: PE Real Estate Gains Momentum as Uncertainty Rises

Jul 21 2017 | 6:04pm ET

The steady march of equity markets and fundamental shift in the direction of Fed...

 

From the current issue of