Investing in the Age of Asia and beyond: Three key hedge fund strategies for 2021

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Dixon Boardman of Optima Asset Management

There are three alternative investment strategies that not only stood out last year but also promise significant opportunity going forward.

Furthermore, even after the uptrend in healthcare stocks last year, I believe significant segments of the sector still remain below historic valuations. 

As with the Age of Asia theme, Optima is relying on a seasoned long/short equity manager who takes an opportunistic investment approach. You really need strong scientific and business expertise to invest successfully in healthcare.

We therefore favor a strategy that combines insights into industry trends with intensive bottom-up, fundamental stock analysis and medical knowledge.

On the long side there are companies poised to generate superior growth from new product approvals, positive regulatory developments, significant mergers or partnerships, or favorable market dynamics. 

On the short side, I believe there are opportunities to target vulnerable companies that are under pressure from intensifying competition, lack of innovation, or failed products.

Best ideas

In addition to these regional and sector opportunities, we should focus on long/short equity hedge funds that have demonstrated an exceptional ability to pick stocks.

Furthermore, such managers can add value by concentrating on their ‘best ideas’. This strategy grew out of our three decades of experience in identifying, evaluating, and selecting outstanding hedge funds.

For this particular strategy Optima looks for managers that meet demanding quantitative and qualitative criteria, and who have a performance record driven by superior stock selection.

While the theme of the strategy is ‘concentrated stock picking’, we include a mix of investment styles, including growth, value, opportunistic, and event driven.

Looking forward our strong belief is that the environment remains highly favorable for managers with superior stock selection capabilities, and who concentrate on high conviction, research-driven investment ideas.

In short, I am bullish on hedge funds. The bottom line is that hedge funds are back. However, this is not a ‘do-it-yourself’ hobby. Successful investing in alternatives requires experience and insight and a commitment to honing our selection skills every day.

Dixon Boardman is CEO & founder of Optima Asset Management