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Howard Marks has talked a lot about what is risk in his memos and so I will put it over here.
I thought OPMIs could get a reminder about maintaining discipline in our own risk management in the greater scheme of things.
Allianz fund collapse ends in guilty plea, US$5.8b deal
The funds were marketed as “providing broad market exposure while maintaining specific risk protections to safeguard against losses in the event of a market crash”, according to Tournant’s indictment.
But in late 2015, Tournant allegedly grew frustrated with the cost of hedging, which was eating into returns. The fund “abandoned the promised hedging strategy and instead began to purchase cheaper hedges that were further out of the money, and therefore less protective in the event of a market crash”, according to the indictment. That change was not disclosed to investors, prosecutors allege.
https://www.businesstimes.com.sg/banking...us58b-deal
I thought OPMIs could get a reminder about maintaining discipline in our own risk management in the greater scheme of things.
Allianz fund collapse ends in guilty plea, US$5.8b deal
The funds were marketed as “providing broad market exposure while maintaining specific risk protections to safeguard against losses in the event of a market crash”, according to Tournant’s indictment.
But in late 2015, Tournant allegedly grew frustrated with the cost of hedging, which was eating into returns. The fund “abandoned the promised hedging strategy and instead began to purchase cheaper hedges that were further out of the money, and therefore less protective in the event of a market crash”, according to the indictment. That change was not disclosed to investors, prosecutors allege.
https://www.businesstimes.com.sg/banking...us58b-deal