Spectre of tail risk haunts hedge fund investment decisions

Chasing the tail

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Garth Friesen, III Associates
Asset price inflation is driving the expected real returns for fixed income markets to multi-generational low levels. Higher-than-expected inflation has the ability to erode returns even further. It is not a comforting fact that the inflation swaps market is now pricing forward inflation at the highest levels since the 2008 financial crisis.

By most definitions a tail event is something that has a dramatic adverse effect on markets that participants could not or did n

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