Black Swan Funds
What are "black swan" funds?
Black swan funds are funds that benefit from unexpected and drastic market changes - known as black swan events. The term was coined by writer and financial professional Nassim Nicholas Taleb after the 2008 financial crisis.
Where have you heard about "black swan" funds?
While you might not know much about black swan funds, you'll be familiar with the concept of black swan events. These are often characterised as sharp and sudden market downturns that nobody expects to happen, like the 2008 US housing crisis and the 2001 dot-com bubble.
What you need to know about "black swan" funds.
In his book 'The Black Swan', Taleb warns that it's crucial for firms to anticipate and plan for black swan events. Black swan funds, like Universa, do exactly that. They assume that periods of stability will be followed by periods of volatility on the market, and plan accordingly, often by investing in long-dated options. They know that while they might not reap the benefits in the short term, when the market becomes volatile their strategy will come into play.