Diversify risk

If the goal is to diversify, there are a number of different strategies to consider.

Diversifiers are a category of alternative strategies that seek to provide returns in excess of cash without exposing investors to the risks of traditional assets, like stocks, bonds and cash.

Different types of diversifiers

Market Neutral

A true market neutral equity strategy, aiming for an average equity market beta of zero, offering diversification and low correlation to the overall equity market.

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Merger Arbitrage

Aims to generate returns from the discount between the market price and "deal" price for target companies in announced, legally binding merger situations.

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Aims to enhance overall portfolio diversification by combining several return drivers that are not dependent on directional moves in the equity and fixed income markets.

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Event-Driven Credit

Target returns from market inefficiencies in the corporate credit space, through a broad range of corporate events, including but not limited to mergers and acquisition, stressed/distressed, capital structure arbitrage, among others.

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Diversifiers are one of two broad categories within Picton Mahoney’s proprietary framework that helps investors zero in on their goals and prioritize what is most important to them. The other category is Enhancers.

A goal-based framework for understanding alternative investments

This information has been provided as a general source of information, is subject to change without notification and should not be construed as investment advice. This material should not be relied upon for any investment decision and is not a recommendation, solicitation or offering of any security in any jurisdiction. The information contained in this material has been obtained from sources believed reliable, however, the accuracy and/or completeness of the information is not guaranteed by PMAM, nor does PMAM assume any responsibility or liability whatsoever. All investments involve risk and may lose value. This information is not intended to provide financial, investment, tax, legal or accounting advice specific to any person, and should not be relied upon in that regard. Tax, investment and all other decisions should be made, as appropriate, only with guidance from a qualified professional.

There is no guarantee that a hedging strategy will be effective or achieve its intended effect. The use of derivatives or short selling carries several risks which may restrict a strategy in realizing its profits, limiting its losses, or, which cause a strategy to realize or magnify losses. There may be additional costs and expenses associated with the use of derivatives and short selling in a hedging strategy.