Sat, May 27, 2017
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. Investing - Tudor Jones backs AI hedge funds, Massive hedge fund trades highlight insider buying: GE, Pentair, Tempur Sealy, Apollo Global and more, Hedge funds big wigs are buying consumer and selling tech, here's the stocks[more]

    Tudor Jones backs AI hedge funds From FT.com: Hedge fund magnate Paul Tudor Jones has invested in a brace of artificial-intelligence powered "quantitative" hedge funds, underscoring the increasing acceptance that the industry will need to turn more to technology and away from traditional

  2. Soon hedge fund investors won't bet on a man, they will bet on a machine[more]

    From Forexlive.com: The Wall Street Journal is in the midst of a 17-part series that looks at the rise of quant funds. The AUM and money invested in quant funds still trails traditional asset managers but the gap is closing. What's truly amazing is volume. Quant funds make up 27% of trading vo

  3. Investing - China's HNA wants to invest in Value Partners, Risk parity investors reap rewards from rebalancing act, SoftBank's $100 billion tech fund rankles VCs as valuations soar[more]

    China's HNA wants to invest in Value Partners From Reuters.com: HNA Group has alighted on a logical, if pricey, target in Hong Kong. The deal-hungry Chinese travel conglomerate known for overpaying wants to invest in Value Partners, one of Asia's few sizeable independent asset managers,

  4. Opalesque Exclusive: Investors warm to ESG, but seek standardization[more]

    Bailey McCann, Opalesque New York: Asset managers and asset owners plan to double their investment in Environmental, Social and Governance (ESG) driven strategies over the next two years, according to a survey from BNP Paribas Securities Services. The report, "Great Expectations: ESG - what's nex

  5. Opalesque Roundtable: France's hidden strengths in AI and machine learning[more]

    Komfie Manalo, Opalesque Asia: All nations offer their strengths and weaknesses, but one that is undisputed is the quality of the French scientists, claimed Guillaume Vidal, co-founder of French technology startup Walnut Algorithms at the