10 Nov 2011
Hermes BPK Partners LLP, an alternative advisory boutique and fund of hedge funds manager, has launched Hermes BPK Global Equity Hedge Strategies with $550 million. This customisable portfolio solution is designed to help institutional investors de-risk their long-only equity allocations through concentrated investments in the long/short equity space. The solution seeks to capture two thirds of the global equity markets’ upside whilst limiting the downside to one third.
Hermes BPK’s de-risking solution has been developed following discussions with institutional clients throughout 2011. A large number of investors that have benefited from the post-crisis equity rally have progressively been forced to question the merits of holding high exposures to equities in the context of extreme market volatility while at the same time being faced with limited risk reduction opportunities through fixed income. The theme of equity de-risking is one that is being faced on a global basis and Hermes BPK aims to develop solutions to address this challenge.
Hermes BPK’s de-risking solution has been developed following discussions with institutional clients throughout 2011. A large number of investors that have benefited from the post-crisis equity rally have progressively been forced to question the merits of holding high exposures to equities in the context of extreme market volatility while at the same time being faced with limited risk reduction opportunities through fixed income. The theme of equity de-risking is one that is being faced on a global basis and Hermes BPK aims to develop solutions to address this challenge.
“While the traditional approach to de-risking has been to shift allocations to fixed income, a strategy that has worked well for a number of years, many institutional investors now recognise that we are at or near the end of a three decade bull market in bonds, which may not represent an attractive entry point for a meaningful purchase of fixed income assets,” said Matteo Dante Perruccio, CEO and founding partner of Hermes BPK Partners.“Long/short equity funds present a highly viable de-risking alternative,” he said. “Through active management, managers can be selected and combined to achieve desired exposures with a reasonable degree of precision. In particular, de-risking goals can be adapted by selecting funds which, when combined, can be tailored to reduce the equity beta of a long-only equity portfolio whilst at the same time providing an alternative and potentially increased source of alpha.”
“Long/short equity funds present a highly viable de-risking alternative,” he said. “Through active management, managers can be selected and combined to achieve desired exposures with a reasonable degree of precision. In particular, de-risking goals can be adapted by selecting funds which, when combined, can be tailored to reduce the equity beta of a long-only equity portfolio whilst at the same time providing an alternative and potentially increased source of alpha.”
