For several decades now, the correlation between asset prices has generally been increasing. Whether this is caused by globalisation and the free transfer of information, algorithms taking over trading, or just falling interest rates, it makes building a truly diversified portfolio more difficult. Dr Laura Ryan, Head of Research at Ardea Investment Management, says that relative value strategies are one option for achieving stable returns that are not correlated to either equities or fixed interest. Relative value strategies seek to identify situations where related securities have become mispriced relative to one another, and then profit as that gap closes. Watch the short video below to learn more, including one strategy to manage risk in a portfolio.
Ardea believes that accurate and transparent risk measurement is fundamental to making intelligent investment decisions and producing the anticipated return outcomes. To find out more, visit their website.
Browsing the web site, I found it difficult to determine whether performance came from strategies such as relative value arbitrage or simply from exposure to the bond bull market.
Hi Graeme, good question. Ardea's Real Outcome Fund has always run with a 0 duration target and holds no corporate credit at all, meaning that the returns have not been derived from exposure to the bull market in bonds (both govt and corporate) prior to the onset of COVID-19. Please feel free to reach out to us at firstname.lastname@example.org and we can send you more information, Cheers, Sam