The Driehaus alternatives team manages the Driehaus Event Driven strategy. The Event Driven strategy employs an array of trade strategies that seek to deliver superior risk adjusted returns, while exhibiting low correlation and less volatility relative to major asset classes/event driven indices. The strategy is led by portfolio managers Michael Caldwell, Thomas McCauley and Yoav Sharon.
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The strategy seeks to provide superior risk adjusted returns with low correlations to major asset classes and lower volatility than the S&P 500 Index.
We believe attractive event-driven investments exist in the global equity and credit markets due to the highly idiosyncratic nature of event-driven situations. Traditional market participants are often unwilling or unable to navigate the capital structure, legal, and regulatory complexity of event driven situations and/or may have discomfort with binary outcomes. The strategy seeks to exploit these market inefficiencies by applying a highly specialized event driven investing framework which enables us to identify the most attractive risk adjusted return opportunity for a given situation.
Imagine placing a bet on a sporting event for which one casino offers winning payout odds of 3-to-1 and a different casino offers odds of 6-to-1…for the same bet. Who wouldn’t choose the latter? Using multiple securities — as opposed to using strictly equity — to invest in merger arbitrage presents a similar opportunity to increase the odds of a successful investment. The Driehaus Event Driven Strategy’s investments in Twitter illustrate this compelling value proposition of using multiple securities to invest in merger arbitrage.
Prior to 2022, yields and forecasted returns for every asset class other than common stocks were so paltry that many market participants began relying on a simple acronym to describe the state of investable markets: TINA, which stood for “There Is No Alternative”. TINA became a household name as many investors came to believe that the only way to earn an adequate real return on their money was to move further out on the risk curve into riskier assets such as common stocks and “private” assets. Today, the inverse of that situation is the critical market driver. Read more about this in our latest commentary.