Global hedge fund experience: the best allocation of various assets

Global hedge fund experience: the best allocation of various assets

Recently, global hedge funds have revealed their annual report cards. Qiaoshui, the world's largest hedge fund, topped the list with an annual return of US $ 4.9 billion in 2016, while the equally well-known Soros and Paulson funds lost US $ 1 billion and US $ 3 billion, respectively, with very different performances.

 

90% of investment income comes from successful asset allocation

Asset allocation is an investment strategy. By choosing to define asset classes, and based on the historical performance of asset classes and investors' risk appetite and liquidity needs, determine the proportion of various assets in the investment portfolio, and improve the return on investment Risk parity.

There is a good analogy: if you want to line up for a football team, not everyone can be a forward or all guards. You must also set up goalkeepers who usually cannot directly contribute points. You must set the pattern, especially This is especially true when facing a strong team. 

In the face of strong teams, in terms of wealth management, it refers to the allocation of professional assets in an unfavorable capital market environment. 

No single asset can continue to obtain stable returns. Different asset classes have different properties of return risk, and have different advantages and disadvantages under different market conditions. As Gary Brinson, the father of global asset allocation, said, To make investment decisions, the most important thing is to look at the market and determine the type of investment. 

In the long run, about 90% of the investment income comes from successful asset allocation.

 

The era of high returns is difficult to return, and the shortage of good assets has increasingly become a world problem

On the one hand, a global vision has become a trend in wealth management, but on the other hand, the overall return on assets has declined. BlackRock, the world's largest asset management agency, predicts that the return on most assets in the next five years will be difficult to exceed 6%, and the era of high returns will be difficult to return. 

An example illustrates this trend vividly: Twenty years ago, investors could easily get a 7.5% return on all funds invested in bonds; 10 years ago, as the return on low-risk assets such as bonds fell, investors needed to allocate half of the high-risk assets to obtain a 7.5% return; Today, the proportion allocated to high-risk assets needs to be around 90% in order to win a 7.5% return.

 The rich ore in the wealth gold mine is decreasing, and the shortage of good assets has become a world problem.

 

Successful asset allocation is the best risk-return portfolio suitable for specific clients

The future is uncertain and the need to return to the roots of wealth management. For wealth management to become a source of water, the "source" is based on investment logic and theory. Establish an open structure, select high-quality products efficiently, and at the same time carry out strict supervision and risk control of the platform.

As market conditions become more and more complicated, it is necessary to carry out comprehensive asset allocation, and the risk of betting on a single product is too great. Investors want to identify the lowest point of the trend and then the highest point when the sector rotates, but in reality this is very difficult to achieve. 

As Peter Lynch said, "Investors should wait for a pullback and make unearned losses far more than the losses caused by a real pullback in the stock market." Instead of over-timing and missing a lot of opportunities, it is better to make asset allocation and achieve overall value preservation. 

At present, for both institutional and individual investors, asset allocation on a global scale is an established prerequisite, but there are not many paths for how to allocate it. If it is simply a matter of getting involved in each asset, it is not asset allocation, at best it is a simple piece together. 

The successful asset allocation comes from the in-depth understanding of high-net-worth clients' own life stages, risk appetite, and financial needs, etc. Utilizing professional research and judgment on the market, and objective knowledge of the level of return risk of various asset classes,Make the best risk-return portfolio suitable for specific clients.

 

Bridgewater Fund's investment strategy: reducing associated assets is the key!

What the wise man sees, happens to coincide. When talking about investment strategies, President Bridgewater said, "In the asset allocation, we must consider the allocation of risk equilibrium and make full use of the possibility of decentralized equilibrium to resist various uncertainties and achieve relatively stable returns."

He said, "This is what Bridgewater does,We try to find a combination of 8-10 assets with very low correlation. If the correlation is only 20%, you will greatly reduce the risk, greatly increase the Sharpe ratio, and the possibility of losing money is extremely low.

In today's world, digital currency has become an emerging and fast-growing investment asset, with investors all over the world, full of extremely high investment opportunities. Investors are advised to allocate digital currency assets appropriately. Of course, because the digital currency market is a special global trading market, it is recommended to open an account on an exchange capable of global cross-border transactions in order to enjoy the opportunities brought by the global market and to avoid market fluctuation risks to the greatest extent.

It is recommended to open an account on the NabobTradeEX exchange, which can provide investors with more than 2,000 digital currencies and can help investors invest in the global digital currency market with minimal capital costs.


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