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From Sagar Chakraverty, Opalesque Asia:

“Once thought impossible, hedge fund replication has become one of the buzzwords in the finance community, driven by the growing realization that most hedge fund returns come from risk premiums rather than manager alpha,” said Dr. Lars Jaeger, the CEO of Alternative Beta Strategies at Zurich-based Partners Group.

In a recent video interview with Opalesque’s founder Matthias Knab, Jaeger, one of the pioneers of hedge fund replication strategies and a prolific researcher on alternative beta, explained why Partners Group had changed its model and went from a $4bn FoHFs to an alternative beta provider. He also described how well the firm’s alternative beta approach performed during the 2008 crisis (see part one of the interview here).

Alternative beta (also known as hedge fund replication), in the context of risk premium oriented investing, is a concept that extends the idea of traditional passive investing into the alternative investment space. It is a cost efficient replication of the varying risk premium that hedge funds are extracting. Investment return can be split into two parts: 1) beta is the return resulting from the risk premium due to a risk exposure, and 2) skill-based return or alpha due to outperformance.

Prior to joining Partners Group in 2001, Jaeger co-fo......................

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