Can hedge funds play the role?

Whether it’s a sports match or a theater production, every member of the team needs a clear and well-defined role in order to quickly identify problem areas and achieve a successful outcome. We think allocation decisions for building portfolios of hedge funds should be viewed similarly. The question is how to select the most suitable types of hedge funds for specific roles and combine them in an optimal way that creates strong alignment with the overall portfolio objectives.

To help, we’ve developed a simple and intuitive framework that focuses on the role each portfolio building block is meant to play and can help identify sources of funding from within existing portfolio allocations. Before explaining the framework, we provide a brief guide to the main strategies offered by the hedge fund industry.