Building a risk-efficient portfolio

Investing

cover80-jpg

The typical investor assembles a portfolio of hedge funds by first allocating assets to different hedge fund styles and then assembling a collection of good managers within those allocations. But investors assembling portfolios of hedge funds should adopt a more integrated approach and instead construct a risk-efficient portfolio of funds. Understanding the present and historical risk exposures of each current and candidate manager, and analysing how a portfolio of hedge funds