Building a risk-efficient portfolio
Investors often fail to see the full scope of the risks faced when building a portfolio of hedge funds. Here, Kenneth Shewer, Marc Goodman and Richard Horwitz highlight some potential problems for the unwary investor and their solutions
The typical investor assembles a portfolio of hedge funds by first allocating assets to different hedge fund styles and then assembling a collection of good managers within those allocations. But investors assembling portfolios of hedge funds should adopt a more integrated approach and instead construct a risk-efficient portfolio of funds.
Understanding the present and historical risk exposures of each current and candidate manager, and analysing how a portfolio of hedge funds
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