Principal protected products for hedge funds of funds

Abstract

Principal protection has been used in a variety of asset classes to help investors avoid negative returns. This insurance may be warranted in investments where volatility is extreme, and the potential for sizable losses, even over the longer-term, is significant. This paper explores the idea of principal protection insurance in the world of hedge funds of funds and argues why it is not necessary given the observed volatility and drawdown characteristics in this area.


Request a copy of this article ยป