Investment Perspectives
Alternative investments can be complicated, opaque, and difficult to navigate. Hatteras Funds offers a variety of resources to help navigate this complex, ever-changing environment.Through the Investment Perspectives series, we offer materials that help identify investment opportunities and offer in depth knowledge designed to foster conversation. Below are the key areas where we see the greatest opportunity.
An Introduction to Alternative Investments
This piece provides an introduction to alternative investments including many of the portfolio benefits, objectives, risks, and options for investment.
An Introduction to Long/Short Debt
Long-short debt is an alternative investment approach developed to take advantage of opportunities across an array of fixed income instruments.
We believe investors should allocate a portion of their fixed income portfolio to long/short debt hedging strategies in order to provide potential return enhancement and mitigate portfolio volatility.
This piece provides an introduction to Long/Short Debt investing, including many of the underlying strategies, portfolio benefits, and risks.
Evolution of Alternatives
We believe investors should allocate a portion of their portfolio to liquid alternative mutual fund strategies for the following reasons:
- Out-performance. Historically, hedged strategies have produced
increased returns and mitigated volatility.
- Transparency, Liquidity, and Access. Liquid alternatives offer investors the benefits of hedged strategies while providing daily liquidity and position level transparency.
- Asset Allocation and Re-balancing Flexibility. The daily liquidity structure makes alternatives easier to implement and can be used as an efficient re-balancing tool.
Hedged Equity
We believe that investments in hedged strategies should be a meaningful allocation within investor portfolios for the following reasons:
- Enhanced Returns. Historically, hedge funds have outperformed traditional long-only equities during flat or bear markets.
- Capital Preservation. By reducing the frequency and magnitude of drawdowns, investors can improve their potential to preserve and grow capital.
- Low Correlation. Historically, hedge funds have been helpful in creating a more diversified portfolio as they have exhibited low correlation to traditional markets.
- Reduced Volatility. The variability of returns has been lower for hedge funds as compared to equities.
Private Equity
We believe investors should allocate to private investments on a global basis as part of a long-term portfolio for the following reasons:
- Illiquidity Premium. Private equity has historically outperformed public markets
. - Out-performance. Over the past two decades, private equity has created substantially increased returns than public markets.
- Recessionary Pricing. Historically, private funds raised during recessionary periods have yielded higher returns than those raised during strong economic times. Thus, we believe the current environment provides an attractive opportunity for investors to gain access to private investments.
- Globalization. Due to the globalization of capitalistic economies over the last fifteen years, the opportunity set in private equity is growing rapidly outside the United States and Europe.