Is risk hedging a risk in itself?


A bit like a metallic umbrella in a lighting storm, crowding in these types of investments is actually likely to lead to the manifestation of an investor’s worst nightmares

By Susan Barreto

The buzz words du jour with institutional investors this month have one thing in common – risk. Risk parity and tail risk hedging pop up in many discussions with investors in hedge funds these days. This is despite the uncertainty about whether they will really do what they promise to do.

Investors have been here before. In the 1980s it was portfolio insurance, a few years ago it was portable alpha – to the savvier investor this was double leverage but few listened – and now the latest risk management fad