New Risk-Management Service to 'Put Together the P

April 16, 2003 at 08:00 PM
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RIDGEFIELD, Conn. (HedgeWorld.com)–Trident Point Capital LLC has added a new service to the consultant side of its business, Total Risk Optimization, which it calls an "efficient frontier analysis" that will manage both active and passive risks.

The managing director of Trident, Michael Rudnicki, said that some investors use hedge funds to hedge passive risks, others to hedge active risks and that both sorts tend to rely on a one-sided analysis or, at best, upon analyses that take the active and the passive side into account sequentially rather than simultaneously.

But Trident's proprietary system, Total Risk Optimization, will change all this. "It takes the [analytical] pieces that are out there in the market and combines them into one step," he said.

Trident, founded in 2001, has two business lines. On the one hand it acts as a fund management company Previous HedgeWorld Story, while on the other it provides alternative investment consulting services. Before founding Trident, Mr. Rudnicki was at Barra/Rogers Casey, "on the consulting side there."

Exiting portfolio theory is indebted heavily to the work of Harry Markowitz and William Sharpe in the 1950s and 1960s. Although Mr. Rudnicki regards Trident's new service as a big step beyond the single-step and multi-step Markowitz optimizations that have resulted, he also recognizes the need to use the same framework and assumptions with which investors and institutions are familiar. He refers to TRO as "board friendly," i.e. it won't require the re-education of board members or investment staff.

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