We short to reduce market risk but in doing so take on a different kind of risk. Our short book is what gives our equity long/short Absolute Return product its non-correlation to risk assets: its ability to make (and lose) money in all market environments and the possibility of generating market beating returns with lower than market volatility. In periods of market drawdown the existence of the short book has protected the assets of the fund (see Figure 1. Argonaut Absolute Return drawdown analysis…
‘Shorting, Squeezing and Drawdowns’
11 Mar 2016
Posted by Barry Norris