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.
In hindsight, our 2020 macro prediction model got it wrong. We failed to predict the global pandemic, worldwide market despair, and more. Despite our lack of precise forecasting, the fund weathered the storm. However, we opportunistically made a series of attractive investments prior to, during, and after the most extreme market moves.
With the recent merger arbitrage litigation settlement in the REIT sector, the event driven space has closed the books on one of the most unique times to invest in Risk Arbitrage. In this piece, we discuss Driehaus Event Driven Strategy’s approach to risk arbitrage investing.