A pod shop PM, what’s the level of volatility they want?
I know the MM wants low volatility on the aggregate, but each PM can run a little higher (since the various books will offset). So if you have a consumer allocation, what’s your target?
Is there a link to the topic of MM portfolio construction?
For a pod shop PM, the level of volatility they target can vary, but generally, they aim for a balance that allows for higher individual book volatility while maintaining low aggregate volatility across the entire portfolio. This is because the various books within the portfolio can offset each other, reducing overall risk.
Regarding a consumer allocation, the target volatility would depend on the specific strategy and risk tolerance of the firm, but typically, it would be higher than the aggregate portfolio volatility due to the offsetting nature of different books.
For more detailed discussions on MM portfolio construction, you can refer to the following link from Wall Street Oasis: - https://www.wallstreetoasis.com/forum/investment-banking/mm-ib-tier-lis…</a">MM IB Tier List | Wall Street Oasis
This link provides insights into various aspects of portfolio management and investment banking, which might include relevant discussions on MM portfolio construction.
Sources: MM IB Tier List, MultiManager PM (Millenium, Balyasny, Schonfeld) minimum requirements, I Want To Get Into Investing. How To Improve Your Knowledge Of Markets?, Hedge Fund: Research Analyst vs. Portfolio Manager, Real Estate Asset/Portfolio Management Tips and Tools
If there is a defined stop-loss/stop-out for the PM at that MM, that is always a good point of reference.
I’m curious if this is true in sectors that solely play on binary events (biotech)?
Absolutely is.
Must be even more tough to do at these shops then…
Not my space, but I would imagine it requires keeping position sizing ultra tight into events.
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