TTU30: Don’t Tweak Your Models! ft. Aref Karim of Quality Capital Management – 2of2
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 670 Ratings
🗓️ 11 September 2014
⏱️ 69 minutes
🧾️ Download transcript
Summary
Welcome back to the second part of our discussion with Aref Karim. In this episode, Aref discusses his firm’s strategies and the broader philosophies that drives what he does. He also talks about market volatility, the need to innovate while keeping models intact, his perspective on drawdowns, and what investors should be asking their managers. You’ll learn something about the art galleries and music that fuels his inspiration, and what he thinks it takes to become a successful hedge fund manager.
You will be amazed by the candid truthfulness of Aref at the end of the episode as he speaks about his personal life and the current state of his business. Thanks for listening to Part 2 of the conversation, I hope you enjoy it.
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In This Episode, You’ll Learn:
- What strategies his firm uses regarding commodities and currencies.
- How Aref explains his investment strategy in a concise and understandable way.
- Why volatility is an important source of information when making investment decisions.
- How to make the best of the current market environment and innovate.
- Why his firm evolves their model on a macro level and does not change the model every time the markets change.
- How QCM manages risk.
- Aref’s perspective on drawdowns and how to make investors comfortable with drawdowns and see them as an opportunity.
- How investors should be evaluating the track records of managers given that some firms’ models have changed over time.
- How growth and technology have effected the relationship managers have with potential investors and why it is still best to meet the manager in person.
- When investors ask questions of potential managers, the economic alignment question often gets left out.
- What it takes to be a successful fund manager: treating it like a business even if you are investing for yourself.
- Aref’s personal appreciation for the arts, art galleries, opera, and jazz. How it inspires him.
- How Aref sees the current state of QCM and why he believes in its future.
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Resources & Links Mentioned in this Episode:
- Learn about Long Volatility vs Short Volatility, mentioned as “Long Vol” by Aref in the episode.
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Transcript
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| 0:00.0 | You're listening to Top Traders Unplogged, episode number 030, where I continue my conversation with |
| 0:07.1 | Araf Karim, founder and CEO of Quality Capital Management. This episode is sponsored by Swiss Financial |
| 0:14.2 | Services. Welcome back to Top Traders Unplugged, where the best traders in the world come to share |
| 0:20.4 | their experiences, |
| 0:21.6 | their successes, and their failures. |
| 0:23.8 | Let's rejoin the conversation with your host, veteran hedge fund manager, Niels Kastro Fland |
| 0:28.6 | Larson. speaking about the sort of the portfolio and the universe of markets and you mentioned |
| 0:46.8 | which just discussed commodities uh i noticed that you offer as far as i'm aware the same strategy |
| 0:53.6 | but with or without commodities. |
| 0:57.0 | Yes. |
| 0:57.6 | And I think that's a big debate, actually, because it's clear that people in the last few years |
| 1:04.8 | who have not had a big allocation to commodities probably did better from a performance point of view in the last couple of years. |
| 1:14.4 | I mean, what do you think is, what is right or wrong, so to speak, in terms of should you have the commodities or should you not have the commodities? |
| 1:22.2 | How do you view that? |
| 1:23.7 | I think it all depends on your perspective. |
| 1:25.9 | Like, you know, our AFP, as we call it, the Alpha Finanational's portfolio, |
| 1:31.8 | that came about through a specific request from a client was, |
| 1:36.9 | an existing client who were already invested in the GDP. |
| 1:40.6 | It was actually a fund of funds, and had in turn, I think a pension fund investor |
| 1:48.0 | who specifically asked if we had a pure financials portfolio. |
| 1:56.0 | So the request we got from our investor was that, look, you know, obviously they were quite |
| 2:02.7 | happy with our strategy and so asked us if we could run some simulations based exactly in |
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