We use a combination of internal and external absolute return strategies to earn investment returns with low correlation to the performance of traditional assets (equities and bonds) or to other client strategies in place. For clients, the benefits of holding assets that behave differently include lower overall portfolio volatility over the long term.
We are building capabilities to manage absolute return strategies internally to get exposure to a diversified set of alternative risk premiums with low correlation to traditional asset classes, such as public equities. Such strategies could include long/short equity, currency or relative value strategies. Our long-term perspective means we can wait for the right opportunities and hold investments for longer periods than many other investors.
For more complex strategies and those that are difficult to build internally, we turn to select hedge fund managers who have a proven competitive advantage in their niche fields and are executing high-conviction ideas that create value for our clients. Examples include macro, currency and relative value strategies, special situations and distressed assets, and reinsurance or insurance-linked securities that are not correlated to market events.
Absolute Return assets under management, as at
December 31, 2018
Of IMCO’s overall portfolio