Wealth management: Where has all the vol gone?

Ultra-high-net-worth clients are becoming more amenable to hedge funds pursuing higher-volatility strategies, say private bankers and hedge funds catering to family offices. “From discussions we have been having with family office and high net-worth clients, it is clear that there is a trend towards accepting funds with higher vol as they look for higher returns,” says Nancy Lee, a director at hedge fund ValueWorks.

As opposed to market-neutral strategies that target 0% market exposure by putting on equal amounts of longs and shorts, or by shorting the index, Lee says ValueWorks’ strategy aims for 100% market exposure using targets of 80% to 150% on the long side and 0% to 35% on the short side.