Thu, Nov 27, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Operational due diligence is a source of alpha

Wednesday, February 15, 2012

amb
Stephen Brown
Bailey McCann, Opalesque New York:

Stephen Brown is one of the world’s leading hedge fund scholars. He is a professor of finance at New York University’s Stern School of Business and was recently interviewed by Greg Despolberch for Opalesque TV. He shares new research that shows operational due diligence can be a form of alpha for funds.

He explains that when he started as a pension fund manager, few investors were focused on operational due diligence when they were looking to get involved in the hedge fund space. When he started to examine this trend he uncovered several macro trends that define how investors approach risk and operational risk in the hedge fund space. His findings show that while investors understand what operational risk is and how it differs from other types of risk, ways of measuring it were lacking.

"There are three major challenges to defining operational risk: number one - its multidimensional characteristic - people, systems can fail in many different ways. Number two is the data - getting information on operational characteristics is difficult. The third and most important issue is the distinction between operational risk and financial risk. My research has clearly shown that operational risk is more predictive of failure than is financial risk. Financial risk is a symptom rather than the disease, and the disease is operational risk," Brown said......................

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. CTAs , event-driven strategies lead hedge funds recovery in mid-November[more]

    Komfie Manalo, Opalesque Asia: November’s performance proves to be in sharp contrast to the previous month, with equities further consolidating their upswing last week, according to the latest Lyxor Asset Management’s Weekly Brief. CTA funds als

  4. 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

  5. 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