Thu, Sep 1, 2016
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Consultants argue that hedge fund replicators lag indexes, hedge funds in performance

Thursday, June 27, 2013

Bailey McCann, Opalesque New York: A new report from investment consultants Hewitt Ennis Knupp shows that hedge fund replicators, which are growing in popularity with some investors still lag the real thing in terms of performance. Some liquid alternatives on the market today, seek to replicate the returns of true absolute return funds but with liquid approaches that fit into mutual fund requirements. However, reliance on indexes, and a high correlation to the equities markets can cause these products to underperform compared to the indexes they track or actual hedge funds.

According to the firm, hedge fund replicators focus on trying to recreate certain factors of hedge fund performance, removing the focus from capturing alpha and managerial skill. The report notes that the most common replication process is to try to capture the broad moves of the "hedge fund universe" through indexes. They say that over time, you may be able to capture much of the same returns as the index, but because the replicator is looking at a universe of funds instead of a given fund or strategy, it won't be nimble enough to react in the same way a hedge fund manager would to shifts in the market.

"The replication strategy is always playing catch up, as it is based on historical data. It can also be relatively sluggish, as most products are only rebalanced monthly. Hence strategies with a high turnover, and mid-month inflection points in markets will be very difficult to replicate," au......................

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. The Big Picture: Water is single largest environmental investment opportunity[more]

    Benedicte Gravrand, Opalesque Geneva: Water, the world’s most precious and undervalued commodity, is set to lead the socially and environmentally responsible investment themes. This is according to specialist fund manager Thomas Schumann. His firm,

  2. Commodities - Hedge funds pile into bullish bets on U.S. crude by most on record, Rig count steady, hedge funds dump short contracts on 63 million barrels, Hedge funds bail on Copper as Goldman predicts ‘supply storm’, Hedge funds pile up bets against sterling[more]

    Hedge funds pile into bullish bets on U.S. crude by most on record From BRecorder.com: Hedge funds and other speculators raised their bullish bets on US crude oil in the past week by the most on record fuelled by speculation that Organization of the Petroleum Exporting Countries will agr

  3. Investing - U.S. hedge fund Marathon makes Brexit bet on European property, Hedge funds love Liberty and John Malone, DE Shaw could bid for control over TerraForm Power, New York hedge fund increases stake in Tronc as sale talks continue, Don't wait too long to check this +20% value fund's ideas[more]

    U.S. hedge fund Marathon makes Brexit bet on European property From FT.com: Marathon, a $13bn US hedge fund, is building a big Brexit trade, increasing its investments in property across Ireland, France, Germany and the Netherlands, in a bet that they will be among the big beneficiaries

  4. Investing - Hedge funds express interest in acquiring Terraform's class B shares, REIFs: A new opportunity for foreign real estate investors, $21bn distressed expert hedge fund likes these 4 ideas, This merger arbitrage ETF is drawing increased interest, Investors look to emerging Asia for returns[more]

    Hedge funds express interest in acquiring Terraform's class B shares From Thecountrycaller.com: The US residential solar provider, Sunedison Inc. has received a bid from hedge fund manager D.E Shaw & Co LP for controlling a stake in its Yieldco TerraForm Power Inc. According to Reuters,

  5. Opalesque Exclusive: Investors struggle to identify the better performing hedge funds[more]

    Komfie Manalo, Opalesque Asia: Fund managers and investors believe that performance is one of the major factors driving change in the hedge fund industry, a Preqin survey showed in its latest Hedge Fund Spotlight. Preqin said that the disappoin