Trends Watch: Multi-Strategy Hedge Fund Investing

EisnerAmper’s Trends Watch is a weekly entry to our Alternative Investments Intelligence blog, featuring the views and insights of executives from alternative investment firms. If you’re interested in being featured, please contact Elana Margulies-Snyderman.   

This week, Elana talks with Kraig Swanson, Founder & Portfolio Manager, Swanson Reserve Capital.  

What is your outlook for multi-strategy hedge fund investing? 

Multi-strategy investment funds can provide diversification benefits that help navigate today's volatile markets. By diversifying across various strategies, these funds aim to adapt to different market conditions and leverage opportunities across asset classes. Non-correlated, diversified strategies are designed to prioritize both stability and opportunities for positive performance, with an emphasis on minimizing drawdowns. Ray Dalio and other prominent investment minds have endorsed this well-studied, non-correlated investment methodology as part of the 'holy grail' of investing. 

Where do you see the greatest opportunities and why? 

We see significant potential in structured notes and quantitative strategies that seek to mitigate downside risk, particularly during periods of market volatility. Investors often seek solutions that can navigate market risk. Additionally, the U.S. market is relatively underexposed to structured products, which we see as an area for further exploration and growth. Supporting the positive outlook in this space, we've engaged in discussions with various prime brokers who are expanding their U.S. distribution for structured products, with some initiatives being funded earlier than anticipated. From over ten years of experience at my former global brokerage firm, I can say that this rarely happens without clear traction. We believe the market for these investment vehicles is still emerging in the U.S., and there is immense room to grow within this significant global opportunity.  

What are the greatest challenges you face and why? 

One of the ongoing challenges in the alternative investment space is raising awareness and understanding amongst investors. Structured products are sometimes perceived as complex, and we focus on making their benefits more accessible and transparent. Navigating the regulatory landscape is also critical, and we continuously work to ensure compliance while seeking to innovate within permissible frameworks. 

What keeps you up at night?  

Certainly not the investment strategy itself; I've invested the bulk of my net worth into these strategies, and our conviction remains unwavering. What keeps me up at night is more about ensuring that we provide best-in-class operations and support for our investors. Running a fund is challenging, especially as an emerging manager. I've had the opportunity to support some of the largest Fortune 100 clients globally, working with larger teams and virtually unlimited budgets. When running your own shop, it's a different scenario.  

The views and opinions expressed above are of the interviewee only, and do not/are not intended to reflect the views of EisnerAmper.