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Alternative Market Briefing

Hedge funds are developing 'cheap’ smart beta products – Part 2

Tuesday, May 27, 2014

Komfie Manalo, Opalesque Asia:

Hedge funds are developing cheap smart beta products that imitate the performance of hedge funds without the huge fees, said consultancy firm Towers Watson. In fact, Towers Watson is developing its own smart beta products.

Towers Watson was able to generate a higher annualized return of 3.1% between 2007 and 2013 by removing excessive fees using smart beta strategies. The returns were higher compared to 1.8% gains from hedge fund indices during the same period.

According to Financial News, AQR and Bridgewater have been peddling risk parity products that seek uncorrelated returns from a range of assets.

Other hedge fund managers who were pioneers of smart beta were James Norman, president of fund manager QS Investors and Eric Shirbini, global product specialist at financial research institute Edhec-Risk. Shirbini is in tandem with Amundi Asset Management to take on active managers through a smart beta exchange traded fund of ETF.

Indeed smart beta is a hot item. Towers Watson said its clients made over twice as many new investments ......................

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