Chapter 20, Problem 1PS

Summary Introduction

To determine:

For an investor's entire retirement portfolio, can market-neutral hedge fund be a good candidate.

Introduction:

Market neutral fund means by using the short and long positions, the investor can make a profit in a volatility trending environment.

Explanation of Solution

An investor's entire retire portfolio should not include market neutral hedge fund, because it is not a good option for retired investors. In fact, a retired investor should not involve any type of hedge in their portfolio. The hedge fund usually reveals a higher risk and the government also does not made proper rules and regulation.

So, it is advisable to a retired investor that he should not invest in a market neutral hedge fund.

Conclusion

Therefore, retired investors should not involve the market neutral fund in their portfolio.