Source: Trends Asset Management calculations using data provided by Bloomberg and Eurekahedge
  • The diversified portfolio of equities, bonds and hedge funds have performed best – primarily due to hedge funds as an asset class outperforming.
  • Notwithstanding better performances, portfolio volatility progressively improves with each asset class added to the portfolio mix due to imperfect correlations between the assets.
  • This is the framework of Modern Portfolio Theory: rational investors seek to hold mean/variance efficient portfolios – portfolios which deliver greatest returns for any given level of risk, by constructing portfolios with a diversified asset mix.