POWERED BY MOMENTUM MEDIA
Australian tail-risk product utilises NASA data
Boutique New Zealand hedge fund manager Kenton-Dau has launched a tail-risk product for the ASX200 based on data gathered by NASA on space weather patterns.
The Australian Natural Tail-Risk Protection fund takes short positions on ASX200 futures based on signals derived from NASA satellites.
"Space weather patterns have long been known to affect performance in other industries such as aviation and power companies, [but] this is the first time the data has been used to help investors predict periods of market disruption," said Kenton-Dau, principal Branton Kenton-Dau.
"Because space weather patterns show when the markets are most at risk, you only have the cover when you need it. This significantly reduces the cost of carry, and can actually increase returns," said Kenton-Dau.
Kenton-Dau Sydney representative John Coombe noted that the ASX200 Total Return Index lost 50 per cent of its value during the global financial crisis, and is still 20 per cent away from its 2007 peak.
"While internationally investors can hedge with volatility derivatives to partly protect themselves, to my knowledge this is the first tail-hedge product custom designed for the Australian investor," Coombe said.
Fund managers can either subscribe to the NASA signal for a monthly fee or have the service managed for them, said Kenton-Dau.
"[The Australian Natural Tail-Risk Protection fund] fills a gap in the market and it is effective. No one wants to experience the consequences of being without insurance when the next black swan lands," Kenton-Dau said.
AUTHOR
Staff Writer
Money Management staff writers are writers who contribute to the website from time to time. If you would like to discuss the content contained within this article please contact us.
Recommended for you
The Australian Retirement Trust is adopting a “healthy level of conservatism” towards the US as the end of the 90-day tariff pause approaches, with “anything possible”.
Uncertainty around tariffs and subdued growth may lead to some short-term constraints in relation to the private credit market, the fund manager has said.
Just three active asset managers are expected to attract net inflows over the coming year, according to Morningstar, with those specialising in fixed income or private markets best positioned to benefit.
Taking a purely passive investment approach is leaving many investors at risk of heightened valuation risks, Allan Gray and Orbis Investments have cautioned.
TOP PERFORMING FUNDS
ACS FIXED INT - AUSTRALIA/GLOBAL BOND
Fund name
3y(%)pa
1
DomaCom DFS Mortgage
92.15 3 y p.a(%)
2
Global X 21Shares Bitcoin ETF
53.24 3 y p.a(%)
3
Global X GlobalX FANG+ ETF
43.15 3 y p.a(%)
4
DomaCom Shoreline North Coogee
36.26 3 y p.a(%)
5
GAM LSA Private Shares AU I
35.87 3 y p.a(%)
