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Forward Guidance
Volatility Hedge Fund Manager Unpacks Derivatives Misconceptions | Benn Eifert
Feb 20, 2025
Benn Eifert, Managing Partner at QVR Associates and an expert in volatility-focused hedge fund strategies, breaks down misconceptions surrounding derivatives and volatility. He discusses the intricacies of risk management in turbulent markets, highlighting challenges of tail hedges and the allure of 'free lunch' finance. Eifert also critiques Stephen Miran’s tariff arguments, exploring the interplay of trade, currency value, and the complexities of U.S. economic positioning. Tune in for insights that demystify options trading and explain the real cost of portfolio protection.
01:10:56
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Quick takeaways
- Benn Eifert emphasizes that volatility-focused hedge funds exploit market inefficiencies in derivatives, aiming for absolute returns independent of market performance.
- The complexity of ETFs using derivatives can mask hidden risks, with Eifert warning that they may not perform as expected in market stress periods.
Deep dives
Overview of Volatility-Focused Strategies
Volatility-focused hedge funds, such as the one managed by Dr. Ben Eifert, employ strategies that capitalize on dislocations and inefficiencies within derivatives markets rather than traditional asset allocation methods. They primarily deal with end users of derivatives, like pension funds, which can create price inefficiencies. These funds aim to identify and exploit pricing discrepancies by structuring trades that include options and other derivatives products such as variance and volatility swaps. Understanding these tools allows funds to manage risk effectively while seeking alpha independent of market beta.
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Discover
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Listen to the best highlights from the podcasts you love and dive into the full episode