Episode 38: Live from CMT 2024 Summit Dubai with FRANK TEIXEIRA, CMT, CFA & DAVID LUNDGREN, CMT, CFA
Fill The Gap: The Official Podcast of the CMT Association
Contrasts in Institutional vs Private Hedge Fund Management
Institutional hedge fund management is characterized by strict mandates, risk tolerances, and significant pressure to perform relative to peers, leading to a conservative approach to market timing and investment decisions. The constant scrutiny and the necessity to minimize perceived risk often result in reactive decision-making, where underperformance in short timeframes can provoke premature selling despite underlying trends. In contrast, private hedge fund management allows for a more flexible and patient investment strategy. With fewer constraints and a personal stake in the investments, one can take on greater risks, maintain looser stop losses, and resist the urge to sell during fleeting market volatility. There is an emphasis on understanding the broader market context and trends rather than reacting impulsively to daily fluctuations. This shift enables a more disciplined approach, fostering tolerance for volatility and a focus on long-term performance, even amidst short-term challenges and noise in the market.
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