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Boston-based firm looks to diversify client portfolios and allocate to risk mitigation strategies

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US investment consultant, Meketa Investment Group, is looking for hedge fund risk mitigation and diversification strategies, as it looks to de-risk client exposure to directional equities. 

US investment consultant, Meketa Investment Group, is looking for hedge fund risk mitigation and diversification strategies, as it looks to de-risk client exposure to directional equities. 

Brian Dana, Director of Marketable Alternatives at Meketa, told Hedgeweek: “We’re very significant advocates of risk mitigation strategies. Most of our clients have a very large allocation to directional equities, whether public or private. So, our goal is to make sure that the marketable alternative strategies that we choose benefit the portfolio in multiple ways.”

Dana explained that directionally-orientated strategies, such as directional equity and credit strategies, don’t fit Meketa’s “natural framework,” and so, instead, the firm uses diversifier strategies, such as equity market neutral, global macro, and insurance link strategies, to build robust portfolios for their clients. 

Meketa tries to find strategies that react positively when equity markets are negative and looks specifically for strategies that “react instantly”. 

The firm uses different risk profiles, including a first responder, a defensive attribute to equity risk; a second responder, used during periods of market stress, such as alternative risk premia investment managers and systematic trend followers; and diversifiers.

Dana stated: “The goal of these strategies is to present an overall profile that supports some sort of risk inside a portfolio.” 

He explained that together, “this programme and these strategies are meant to be positive carry, on a relative basis, and provide asymmetry during an equity market sell-off.”

He stated that Meketa spends “the vast majority of its time researching first and second responders, and diversifiers, trying to uncover factors it thinks could be beneficial to those particular components.”

The company’s methods were tested when Covid-19 hit the West in March 2020. Dana described this as “a watershed moment” for Meketa; it was an ultimate test which revealed Meketa’s strategies to be robust.

The firm manages a total of USD1.7 trillion AuA across their 200 clients. In market alternatives, the firm advises on and manages over USD50 billion in assets for approximately 100 clients.

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