Tuesday, 4 July 2017

Multi-asset funds only worked under QE

A number of multi-asset/ absolute return funds, made money steadily from 2008 and raised a lot of money. Often marketed as vol controlled thematic macro, or strategic funds etc, the ones I reviewed are basically just long bonds and long credit risk; so a border line scam operation marketed via the usual consultant led distribution channels to naive institutional investors.

Then the Fed stopped QE3 in Oct 2014 and markets became jumpy culminating in the August 2015 flash crash. 

Since then a number of well known versions of this strategy have been flat/ slightly down/ slightly up. Eitherway they look broken to me. 

Now the Fed is looking to start withdraw stimulus. When the tide goes out, you see who is swimming naked. 


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