“Alternative” Investment Funds
We tend to think of “alternative” investment funds as those whose performance is not closely correlated with that of an underlying investment market. They are widely used at Aria Capital as a means of reducing risk in portfolios without sacrificing long term performance.
As is the case with traditional funds, the real value in the use of alternatives is to apply a “portfolio approach” whereby many styles, approaches and underlying asset classes are combined to work alongside each other. This helps to produce reasonably consistent returns that are not particularly exposed to the performance of volatile investments markets.
Alternative investments are sometimes more complex than traditional investments, and the skills required to successfully manage alternative investments don’t always transfer readily from the traditional investment realm. Therefore, when selecting alternative investment funds, Aria Capital seeks to identify those that have demonstrated particular expertise and understanding of their underlying asset universe and have delivered above-average returns in the context of carefully managed risk budgets.
Within this category there are a variety of styles:
- Long/Short: our long/short investments are managed by a variety of global long/ short specialists who utilise asset classes including European equities, UK equities, emerging market debt, credit, commodities, etc.
- Trend-following: our trend following investments (often referred to under the banners of “CTAs”, “managed futures”, “quantitative” or “systematic” investments) are computer-based strategies that trade global exchange-traded futures and options markets in commodities, equity indices, bonds, short-term interest rates and currencies.
- Multi-asset: our multi-asset absolute return investments combine a wide variety of individual positions with the aim of producing positive returns in a variety of market conditions. These funds invest in traditional asset classes such as equities, bonds and property and advanced investment strategies using derivatives.
- Private equity: private equity investments tend to involve investors pooling their resources to invest in privately held companies, often under the management of a dedicated private equity fund manager. They tend to be long-term in nature and offer little or no liquidity until they mature.
- Currency: exposure to currency investments can be gained through both specialist actively managed currency funds and through systematic funds that employ mathematical models that aim to capture trends, self-correcting movements and interest rate differentials between currency pairs and combinations of currency pairs.