Analysis > Analysis and Strategy

South African hedge funds: Taking granular approach

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Since the outbreak of Covid-19 asset classes have tumbled globally. Modern portfolio theory always dictates that a well-diversified portfolio should have a mix of asset classes that diversify the risk / return profile over time. However, in periods of market shocks and fast-moving markets on the downside we see much more auto correlation between asset classes. That is, they all behave similarly in varying degrees which, in the short-term, confounds the diversification principle.