Sat, Oct 1, 2016
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. Opalesque Exclusive: BlackRock taps Artivest for alternative investment platform partnership[more]

    Bailey McCann, Opalesque New York: BlackRock will be working with New York-based Artivest to provide a platform for broader distribution of BlackRock alternatives funds. Artivest is a technology-driven alternative investment platform that also offers brokerage services. BlackRock has approximatel

  2. Eden Rock buys Gottex stake in ERG Asset Management[more]

    Matthias Knab, Opalesque: Eden Rock Group announced the purchase of Gottex’s stake in ERG Asset Management and so the firm is now wholly owned by Eden Rock. The two firms established the joint venture in 2011 to focus on providing cost effective solutions to funds holding illiquid investments, as

  3. "Hedge fund industry needs to shrink"[more]

    Komfie Manalo, Opalesque Asia: Writing for CNBC, Josh Brown, creator of The Reformed Broker blog and financial advisor for Ritholtz We

  4. Strategy - Voyager Management wants to invest in smaller hedge funds[more]

    From Valuewalk.com: Voyager Management, a $475 million fund of funds, is looking to downsize the hedge fund’s in which they invest, looking for smaller funds with assets under management that enable the fund to be nimble. The fund is looking for noncorrelation and will consider long / short equity

  5. Asia - Quant hedge funds are China's hot new export, Europe banks return to Korean brokerage market; target debt, alternative products[more]

    Quant hedge funds are China's hot new export From Bloomberg.com: Add China’s quant shops to the list of hedge funds branching out across Asian markets. Quantitative money managers from the world’s second-largest economy are opening offshore funds at a never-before-seen pace, according to