Matching long and short exposures
Most of the strategies’ short books are made up of relative pair trades, which are expected to underperform the corresponding long holdings in the same sector. The portfolios also have short positions where events such as disappointing earnings, competitive product launches etc. are expected to trigger price falls.
Fine tuning market exposure
Taken together, the two strategies offer a unique combination that enriches the wealth manager’s opportunity set, particularly in current market conditions.
Demand for sophisticated strategies
While the mood in Asian markets has lifted in 2019 and 2020, the equity market rout of 2018 is not long ago. That was the worst year in a decade for China’s equity market – the Shanghai composite index fell by almost a quarter, or 24.6%,4 unsettled by the trade war and a slowdown in growth.