Tue, Sep 16, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: A practitioner’s scorecard to hedge fund replication

Monday, January 20, 2014

amb
Andrew Beer
This article was authored by Andrew Beer, founder of Beachhead Capital Management LLC in New York. Below is the first part; you can download the full version of the article here.

There is a great deal of confusion about how to measure the success of hedge fund replication – in a sense, to answer the question, "Has hedge fund replication worked?" In this note, we provide a candid assessment of the successes and failures of the space and introduce a framework of five criteria – a "scorecard" – as a guide for potential investors.

On the one hand, replication products overall have fulfilled the original promise of delivering "hedge fund returns" but with much lower all-in fees and daily liquidity. Specifically, over the past five plus years an array of replication products has delivered returns comparable to funds of hedge funds and, more importantly, outperformed managed account platforms, UCITS funds and investable hedge fund indices.

On the other hand, potential investors often are put off by the complexity and opacity of many such products – especially those offered by investment banks. We attribute this frustration to unrealistic expectations, set by the banks themselves, that the strategy should be as simple and predictable as "investing in the S&P 500 index" – that is, a default allocation that requires minimal due diligence with de mi......................

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 - Big hedge funds show interest in Alibaba, Maglan joins other hedge funds in rush to Argentinian assets[more]

    Big hedge funds show interest in Alibaba From Hereisthecity.com: …Three other major hedge fund investors who have shown interest in the IPO are Dan Loeb of Third Point, David Tepper of Appaloosa Management and Dan Benton of Andor Capital Management. All three were among the roughly 800 p

  2. Investors looking at other sources for hedge fund-like returns[more]

    Komfie Manalo, Opalesque Asia: Investors who are always on the lookout for higher gains are looking at alternative sources of income, particularly exchange-traded fund industry that generates hedge fund-like returns, according to

  3. SEC charges Minnesota hedge fund manager with fraud[more]

    Bailey McCann, Opalesque New York: The SEC has brought charges against Minneapolis-based hedge fund manager, Steven R. Markusen for bilking investors out of fees and portfolio pumping. According to the complaint, the management fees earned by Archer Advisors LLC were shrinking due to the funds’ w

  4. …And Finally – Immature[more]

    From Newsoftheweird.com: Princeton University professor John Mulvey, 67 (who teaches financial engineering applications), was charged in July with stealing 21 yard signs around the town of Princeton -- signs for a computer repair business owned by a man with whom he was feuding. Nathan McCoy,

  5. Investors move capital out of Scotland ahead of referendum[more]

    Benedicte Gravrand, Opalesque Geneva: Ahead of Scotland’s independence referendum on September 18, asset managers, investors and pension savers are moving billions of pounds out of the country,