The Meb Faber Show - Better Investing

The Best Investment Writing Volume 5: Vineer Bhansali, LongTail Alpha - Diversifying Diversification: Downside Risk Management with Portfolios of Insurance Securities

Nov 19, 2021
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ANECDOTE

Paper Origins And Authors

  • Vineer Bhansali introduces LongTail Alpha and their focus on tail-risk hedging and trend following.
  • He notes the paper was coauthored with Jeremy Holdam and published in a portfolio management journal.
INSIGHT

Diversify Your Diversifiers

  • Using many risk-mitigation tools together improves robustness versus betting on one best strategy.
  • Bhansali calls this approach "diversifying diversification."
ADVICE

Use Cheap Insurance Opportunistically

  • Do deploy insurance securities when their pricing is attractive rather than always favoring a single hedge.
  • Bhansali recommends using cheap insurance across asset classes when available.
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