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By Damien Hatfield, founder of Hatfield Advisors, Sydney, Australia:
I recently attended the I&T Absolute Returns Funds Conference in Melbourne. As
usual, Colin Tait, Greg Bright and team organised a great conference.
There was a lot of talk at the conference about Alpha Beta, Alpha Separation, Portable
Alpha, yada, yada, yada. One of the emerging areas is the application of Hedge Fund Beta,
which can be achieved through Hedge Fund Replication. Confused? Well so am I, and I've
been around this business for 20 years.
One of the reasons why I am so passionate about the Hedge Fund Industry is that you
meet some really interesting people. Early in my career I brokered and raised money for
CTAs. Some of the CTAs were members of the "Turtle" group which was founded by
Richard Dennis and Bill Eckhardt. The CTAs included Sjo, founded by Susan Sjo; Jerry
Parker's Chesapeake; and EMC, amongst others.
These were the original trend-following CTAs of which Chesapeake became the most
famous. 15% compound over twenty years. They operate outside of Richmond, Virginia,
managing over $1 billion. If you were talk to Jerry about Alpha and Beta within his
program, I'd suggest he would say you were mad. He generates a trade signal, say S&P 500
Futures, as a buy. Goes long and cuts out when the signal says sell. Sure there's Beta in
there, if he's got the trade right, but do you think as a trader, he is considering beta within
the total portfolio or eve...................... To view our full article Click here
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