Gareth Henry is the current managing director at a global investments firm. Henry born in London developed a passion for financial risk judgment and mathematics saw him enroll to Heriot-Watt University in Edinburgh where he pursued Bachelor of Science degree in Actuarial Mathematics and Statics in 2001.
Having served in various capacities in the alternative assets industry, Gareth Henry has developed robust experience in advising on investment strategies that can be used to diversify one’s portfolio. In this piece, in particular, he is talking on Hedge Funds which have risen in popularity and offer solutions such as going short and investing in non-traditional asset classes which promise investors higher returns.
Gareth Henry asks stock, bond and hedge fund investors to have a right mix of allocation strategies through first analyzing their characteristics from a risk standpoint. Hedge funds manager he says can perform in both bull and bear markets. That is to mean these investment vehicles not only play well when the market is up but also when it is down.
Hedge funds performance appears very volatile, and Henry thus says it is crucial for an investor to understand both past performance and strategy when investing. Bond and equity investments are also unstable but are known to follow predictable investment patterns.
When comparing hedge funds performance to equity markets, Gareth Henry noticed that hedge funds outperformed equities in the long run in terms of absolute risk and adjusted reruns. Equity markets have been known to perform better at a significant rate in bull markets, however, sophisticated investors know for a fact that such conditions don’t last forever and thus hedge funds work as leverage in bear markets.
Market fluctuations order the day in investment which in turn affects interest rates. Gareth Henry who has experienced these market cycles says that hedge funds flourish in market dislocations that cause rising interest rates and market crashes. Hedge funds in such situations of negative rate impacts they take a macro approach of shorting stocks or focusing on less correlated markets.
Henry thus advises investors to invest in hedge funds in cases when traditional equities are struggling to improve portfolio performance.
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