Traditional Investment Programs and Absolute-Return Strategies

20 Pages Posted: 9 May 2015 Last revised: 14 May 2015

See all articles by Hilary Till

Hilary Till

Premia Research LLC; EDHEC-Risk Institute; J.P. Morgan Center for Commodities, University of Colorado Denver Business School; Global Commodities Applied Research Digest

Joseph Eagleeye

Premia Research LLC

Date Written: April 2003

Abstract

Some have argued that there is an accelerating convergence between the hedge fund industry and traditional institutional fund management. This article will argue the opposite: that in a very fundamental way, these two investment industries are still quite distinct.

This article will argue that the differences between traditional investment programs, which are designed around outperforming benchmarks, and alternative investment programs, which are designed to deliver absolute returns, mainly result from competing views on sources of investment returns. These competing views then result in differing: investment processes; risk management practices; and roles for financial service providers.

This article will also maintain that the differing types of absolute-return programs result from varying investor preferences in return-to-risk trade-offs. One can summarize the competing views on sources of investment returns as follows: asset allocation is the dominant performance driver; absolute returns should be expected from each investment; and a hybrid view.

Keywords: hedge fund, absolute return, alternative investment, performance, risk measurement, asset allocation, Institutional investor

JEL Classification: G10, G11, G23

Suggested Citation

Till, Hilary and Eagleeye, Joseph, Traditional Investment Programs and Absolute-Return Strategies (April 2003). Available at SSRN: https://ssrn.com/abstract=2603980 or http://dx.doi.org/10.2139/ssrn.2603980

Hilary Till (Contact Author)

Premia Research LLC ( email )

United States
312-583-1137 (Phone)
312-873-3914 (Fax)

HOME PAGE: http://customindices.spindices.com/custom-index-calculations/premia/all

EDHEC-Risk Institute

Nice
France

HOME PAGE: http://risk.edhec.edu/

J.P. Morgan Center for Commodities, University of Colorado Denver Business School ( email )

1475 Lawrence St.
Denver, CO 80202
United States

HOME PAGE: http://www.business.ucdenver.edu/commodities

Global Commodities Applied Research Digest ( email )

J.P. Morgan Center for Commodities
1475 Lawrence Street
Denver, CO 80202
United States

HOME PAGE: http://www.jpmcc-gcard.com/hilary-till

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