Chasing trends is a dangerous game

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Big investors currently pursue two very different strategies when appointing external managers. Their traditional approach is to hire fund managers for portfolios benchmarked to market indices with risks quite tightly controlled. They are simultaneously increasing their allocations to hedge funds, measured against cash and free to take every liberty under the sun.

Both approaches generally produce disappointing results, especially for long- term investors such as pension funds. As it happens, this is for related reasons.

Read article on Financial Times