The returns from relative value strategies run in cycles, says Basil Williams, CEO of Concordia Advisors.
Performance is often at its best in the aftermath of a market crisis or tail event which serves to exacerbate the structural imbalances and inefficiencies that relative value traders aim to exploit.
By contrast the opportunities for the strategy are limited when markets are stable and efficient. Spreads are squeezed, trades become overcrowded and managers start taking on more leverage to meet
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