Investor should be reducing beta and hedging as the threat of a market correction looms, RAM Active Investment partner and senior fund manager Maxime Botti has told Citywire Switzerland's sister title Citywire Deutschland.
Botti noted that the lengthy bull market means a correction could come at any time. He believes investors should be prepared.
He said: 'After this long bull market, the chances of a stronger correction are greater than a few years ago. Investors must therefore reduce their beta. Hedging is absolutely necessary.'
Botti noted that there is no way to tell when a market correction will hit – just like an unexpected thunderstorm.
'I don't know if or when the big rain will come, but it's certainly not wrong to have an umbrella with you,' he said.
RAM AI currently holds approximately CHF 2.1 billion in its beta-neutral long/short portfolios – a division that has experienced inflows of around CHF 460 million year-to-date, potentially indicating increased defensiveness amongst investors.
'With our funds, you can reduce the beta and the market risk of the portfolio,' Botti said. 'The interest in these strategies is very high. The need for portfolio hedging is increasing.'