James de Bunsen and Peter Webster, Co-Fund Managers on Henderson Alternative Strategies Trust, explain how the Trust outperformed during October’s sell-off and why they are confident the portfolio can weather expected volatility in 2019.
Diversification: A way of spreading risk by mixing different types of assets/asset classes in a portfolio. It is based on the assumption that the prices of the different assets will behave differently in a given scenario. Assets with low correlation should provide the most diversification.
Private equity: Investment into a company that is not listed on a stock exchange. Like infrastructure investing, it tends to involve investors committing large amounts of money for long periods of time.
Quantitative easing: An unconventional monetary policy used by central banks to stimulate the economy by boosting the amount of overall money in the banking system.
Quantitative tightening: A contractionary monetary policy applied by a central bank to decrease amount of liquidity within the economy.
Volatility: The rate and extent at which the price of a portfolio, security or index, moves up and down. If the price swings up and down with large movements, it has high volatility. If the price moves more slowly and to a lesser extent, it has lower volatility. It is used as a measure of the riskiness of an investment.