A widely regarded safe bet, consisting of a relationship between US & Asian stocks stretching back decades, has equated to losses for many firms.
This came as a shock performance for many, due to the belief that these are low risk bets on volatility.
The trades brought about much welcomed returns in the 2008 crisis, however perhaps this highlights the risks of relying on historic bets.
Govert Heijboer – Co-Chief Investment Officer of Hong Kong’s True Partner Capital was quoted;
“Being long Asia versus short U.S. volatility worked in 2008, so it back tested well as a trade for stressed environments”
“In practice, it turned out otherwise.”
With such uncertainty, many have turned to gold as a refuge as it’s risen roughly 12% this year.
Some of the largest hedge funds in the world are raising their bets on gold, as they prepare for devaluations of currencies following the coronavirus outbreak. Notable names include;
Paul Singer’s Elliott Management, Andrew Law’s Caxton Associates and Danny Yong’s Dymon Asia Capital.
AlternativeSoft is an award-winning quantitative analytics software specialising in asset selection, portfolio construction and customised reporting. To find out more or register for a free demo, get in touch with our team.
81 Farringdon Street, London,
+44 20 7510 2003+1 914 481 2981