Time is ticking down on 2017, so here’s an easy way to summarize what was happening in the alternative investment space this year – highlighting the top 10 posts on our Attain Alternatives blog based on the number of reads. Check them out below:
Back in April, we highlighted AQR’s AQMIX Fund, the bellwether of Managed Futures Mutual Funds, and looked into why it’s been underperforming the Managed Futures industry for most of the past two years. Hint: it’s really big.
There’s no better evidence of the necessity of diversification than the Callan Periodic Table of Investment Returns that makes the rounds each year, but it’s always missing Alternative Investments. We fix that in our redo of the table.
Artificial Intelligence, Algorithms, Quants, Computer Driven Strategies, FinTech. No matter how you phrase it, those buzz words are here to stay in the financial realm. But we still think the scope around the discussion of quants is far too small. What we find interesting isn’t classifying the money flows into quant strategies, but discussing what people are doing in the quant space overall; who and how algorithms are being built; where the lines blur with FinTech; and the lineup of players in the space.
We were a little confused at this WSJ headline, finding it a little disingenuous to pretend this is new at all. It’s at least as old as pre-financial crisis, as portrayed in a book called Quants penned by a WSJ reporter. But more than that – futures focused hedge funds have been doing quant stuff for decades. Some might even say they invented it.
Cryptology, decentralized ledger, theoretically tamper-proof? Before our imaginations run rampant, here was our best attempt at explaining Bitcoin:
Maybe it’s just us – but we don’t think a “wait-and-see” approach bodes all that well for a portfolio when it comes to volatility. It’s a little like trying to put on your seatbelt in the middle of the car crash. Over in the Alternative Investment space, we have a slightly different approach to dealing with volatility. We look at it as a tradeable asset, going both long and short volatility, hedging it, creating stat arb strategies around it, and generally seeking out how to squeeze alpha out of the know unknowns index – the VIX. Here’s our rundown from a panel of hedge fund managers heavily involved in the volatility space.
Bitcoin futures started trading on the CME and CBOE this year. Here’s the Bitcoin margins, Bitcoin Price Limits, and what you would need to know to invest in Bitcoin futures.
Bill Ackman had a very bad trade in Valeant. We analyze why this is not a referendum on all hedge funds, but instead a referendum on the wisdom of entrusting a single ‘activist’ to get it right, day in and day out, without fail. It’s a referendum on going with a human instead of a human-controlled robot. Systematic programs sure have their own issues from time to time – and aren’t the brightest crayon in the box currently (to borrow a line from Corrine), but those pale in comparison to these types of risk.
That’s actually a trick headline, as you can’t trade the VIX directly. It’s just an index of options prices. But you can invest/trade in products that track the VIX, like VIX futures, VIX ETFs, inverse ETFs, and more (here’s an in-depth research report). It’s called trading volatility, and with seemingly everyone giving it a shot of late (Billions are in VIX futures-related ETFs), we thought a nifty flowchart of just how to proceed would be worthwhile.
There’s been a growing chorus lately suggesting that perhaps the record low VIX readings aren’t due to record low feelings about volatility, but instead due to the dramatic increase in VIX products and assets betting on decreases in volatility. It sure feels like that is the case, with every move higher in the VIX seemingly smacked down earlier, and with more force, than the one before it. We’ve covered it before, but who wants to read when you can see it in pictures… infographic style:
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