When Donald Trump recently called for US companies to abandon quarterly reporting in favour of semi-annual disclosures, he inadvertently reignited one of finance’s most persistent debates. “China has a 50-to-100-year view on management of a company, whereas we run our companies on a quarterly basis,” the president posted. “Not good!!!”
Strip away the political theatre, and Trump has stumbled onto something worth discussing: the tyranny of short-termism. But the solution isn’t simply changing reporting frequency. It’s fundamentally rethinking how we measure success in the financial world, a hedge fund arena.
Beyond lockups and liquidity
In the hedge fund world, “long-term thinking” often gets confused with long-term lockups. Yet many allocators come to hedge funds precisely for their liquidity, seeking alternatives to the multi-year commitments required by private equity. The real question isn’t about trapping capital but about investment philosophy.
Michael Schülli, co-founder of Vienna-based BlueBalance Capital, sees this distinction clearly. “We need to differentiate between long lockups and trading style,” he argues. “A lot of firms who have long lockups actually don’t have a long-term trading style.”
His fund, which manages €450m hunting pricing dislocations across derivatives markets, operates on 12-24 month holding periods, not because capital is locked up, but because that’s how long it can take for mispricings to correct. That is what makes BlueBalance’s approach different: having time on your side is the strategy itself.
Signal versus noise
“It’s not the uncertainty of the outcome,” Schülli explains. “It’s the uncertainty of the timing of the outcome.” His team hunts for parameters trading at statistical extremes, typically above the 90th percentile, then waits for mean reversion. A clearing basis trade of identical swaps between exchanges might take months to monetise, but the terminal probability of success is very high. The question isn’t whether it will materialize, but when.
This patience-based approach reveals what’s actually broken in modern markets: the inability to distinguish signal from noise. “We try to differentiate between signal and noise,” says Schülli. “Signal, for us, is a dislocation in the medium term that will likely monetise. The noise is the short-term market moves that are completely irrelevant to what we’re harvesting.”
The industry’s obsession with monthly performance, driven by quarterly investor reviews creates systematic blind spots. Funds that must deliver consistent monthly returns cannot afford temporal uncertainty. Many of them have to trade in a way that can force them to monetise quickly, leaving medium-term opportunities underexploited.
This is where BlueBalance finds its edge. The fund’s 90 concurrent positions maintain near zero pairwise correlation partly because these trades exist in a less crowded time horizon. The more capital that chases monthly alpha, the more opportunities emerge for those willing to wait. It’s not just less competition but a different type of diversification altogether. “You can diversify through asset classes and risk factors,” Schülli notes, “but you can also diversify through the time element itself.”
Time as diversification
What gets overlooked in this rush for monthly returns is that time horizons themselves offer diversification. Most allocators build portfolios across asset classes, geographies, and strategies. Few consider temporal diversification: combining managers who trade different time horizons.
BlueBalance’s patient approach provides exactly this. While the majority of hedge fund capital hunts for monthly alpha, a strategy built on 12-24 month holding periods behaves differently during market stress. When short-term traders must exit positions to meet redemptions or margin calls, longer-horizon funds can hold through volatility.
The fund’s 15-year track record demonstrates this and performance over the last three years of 11.80% p.a. with a Sharpe ratio just under 2, positive performance in 30 of the last 36 months despite accepting some mark-to-market volatility underlines the case. The key is that temporary drawdowns don’t force exits when the investment thesis remains intact.
“We accept that it’s about delivering over annual horizons, not monthly,” says Schülli. In an industry built on quarterly thinking, that temporal arbitrage creates both alpha and genuine portfolio diversification. For allocators willing to match their evaluation periods to the strategy’s time horizon, patient capital offers something increasingly rare: uncorrelated returns that don’t depend on predicting market direction.
