Sat, Nov 29, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Opalesque Exclusives – Funds of hedge funds’ liquidity constraints and fees generate negative alpha compared to l/s hedge funds

Monday, June 13, 2011

From Kirsten Bischoff, Opalesque New York:

In a white paper recently released by French firm Orion Financial Partners the firm found that long/short equity hedge funds notched much better performance than UCITS funds and specialty fund of hedge funds. The firm researched returns listed with Eurekahedge and found that "over the period 2005-2011…hedge funds have significantly outperformed UCITS funds and specialized fund of hedge funds respectively around +2.3% and +5.2% in annual terms." The strength of single manager l/s hedge funds was also on display as the firm’s research showed that they exhibited better Sharpe ratios and lower levels of extreme risk compared to the other vehicles.

The paper goes on to say, "More surprisingly, fund of funds posted a negative alpha over the estimation period," which the firm attributes to the additional fee layer, and the tighter liquidity constraints faced by fund of funds managers that have to deal with the lockup and redemption periods of the funds they invest into (which were largely related to the 2008 crisis.

Investors currently have three options for different types of vehicles through which to gain hedge fund exposure: hedge funds, UCITS funds and fund of funds. The paper concludes that While UCITS funds offer higher levels of liquidity, this factors into those managers’ ability to generate alph......................

To view our full article Click here

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Unlucky Paulson & Co. rebrands $1.6bn Recovery Fund after 13% drop[more]

    From Businessweek.com: A maturing U.S. economic recovery is prompting Paulson & Co. to change course. The $19 billion hedge fund firm, led by billionaire John Paulson, told investors on a conference call this month that the Paulson Recovery Fund will be renamed Paulson Special Situations Fund on Jan

  2. Opalesque Roundtable: Islamic Finance races ahead with Sukuk, the first managed account platform, and foreign demand[more]

    Komfie Manalo, Opalesque Asia: A number of developments took place within Islamic finance in the past years, including the launch of a Islamic managed account platform and the further growth of the sukuk space that saw this instrument evolve from being a type of an ABS security that was rarely

  3. Fund Profile - A complex hedge fund strategy works for United Technologies[more]

    From Institutionalinvestor.com: Reports that portable alpha is dead have been greatly exaggerated, as Mark Twain might have phrased it. Another Connecticut Yankee, giant United Technologies Corp., is gearing up to grow its successful, nearly decade-long portable-alpha program. The UTC strategy took

  4. Opalesque Exclusive: The unintended consequences of Basel III[more]

    Benedicte Gravrand, Opalesque Geneva: Bijesh Amin, co-founder and managing director of Indus Valley Partners (IVP), a technology solutions and services firm focused on the alternative asset management industry, has recently observed

  5. Legal - Six years after AIG takeover, lawsuit reveals another potential buyer[more]

    From Institutional investor.com: When former Treasury secretary Henry (Hank) Paulson Jr. testified in a suit last month about the U.S. government takeover of American International Group, his words were — mostly — numbingly familiar. Explaining the “punitive” terms set for the September 2008 bailout