Julian Klymochko, Accelerate Financial Technologies - The Democratization Of Alternatives, It’s Happening...| #231
In episode 231, we welcome our guest, Julian Klymochko, founder and CEO of Accelerate Financial Technologies. In today’s episode, we’re talking liquid alts and democratizing alternative strategies that have been tapped by the world’s largest institutions for decades. We get into the current state of liquid alts and hedge funds, and the standardization and commoditization that has come with increased competition. We talk about merger arbitrage. Julian offers a story about a 2014 trade that went awry when he was running his first hedge fund, adding color to some of the mechanics and risks inherent in the strategy.
Key Points
- Liquid alternative investments, such as arbitrage and private equity replication strategies, offer institutional-level strategies to retail investors with the benefits of increased transparency, liquidity, and lower fees compared to traditional hedge funds.
- The private equity industry has witnessed a shift where, despite not outperforming public equity since 2006, there is a persistent high demand due to its perceived lower volatility and the smoothing effect of mark-to-model accounting, which masks the true underlying risk.
- Diversification into uncorrelated asset classes, including various alternative strategies, is crucial for enhancing portfolio risk-adjusted returns and achieving the "holy grail" of investing, which helps investors to stay the course during market turbulence.
Resources: Absolute Return podcast Beat the Market: A Scientific Stock Market System (Thorp, Kassouf) The Art of SPAC Arbitrage (Klymochko) The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets (Faber, Richardson) The First Time I Lost $1 Million (Klymochko) Yale Endowment Report Replicating Private Equity with Value Investing, Homemade Leverage, and Hold-to-Maturity Accounting (Stafford) Should Harvard’s Endowment be Managed by a Robot? With Markets At Record High Valuations, This One Investment Strategy Can Help Diversify Your Portfolio (Klymochko)
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Transcript
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