Complicated Alternative Strategies: Greenwich Associates

November 27, 2011 James Heinsman Hedge Fund News

According to Greenwich Associates, hedge funds and various other alternative investments should work to provide better protection and liquidity. Alternative investments can be complex, and so provide better risk-adjusted returns, but they also have other issues on the side.

“The cost of complicated alternative strategies is the complexity they introduce into the portfolio management process. The benefit has been the ability to source returns from a broader spectrum of opportunities and ultimately to provide the prospect for higher risk-adjusted returns, the holy grail of investing,” Greenwich explained in ‘Best Practices in Alternative Investing: Managing Complexity.’

The paper went on the say that liquidity is easily influenced and changes as markets change. It added that investors, including endowment funds, pension funds, insurance companies and private family investors need to make sure to clarify how each manager deals with leverage, as well as determine the best amount and duration of leverage for individual situations.

 

Alternative Investments, Greenwich Associates, Hedge Funds, Managing Complexity,

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