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Matthias Knab, Opalesque:

Rob Christian, Senior Managing Director, Head of Research K2 Advisors, Franklin Templeton Solutions, writes on Harvest Exchange:

When describing hedge-fund performance and more specifically hedge-fund alpha, words like "generating," "producing," and "creating" are often used. These expressions are somewhat misleading, in my view. They imply that hedge funds, by their own sheer will and determination, can somehow conjure alpha on demand. For the majority of hedge funds this is not the case. Technically speaking alpha is not generated, nor is it produced, manufactured or built. Indeed, for the majority of successful hedge-fund managers, the most that can be expected of alpha is that a fair amount of it may be captured over the course of an investment horizon. That is the key - alpha is largely captured. A good market day for a hedge fund means that the fleeting alpha ghost has had the misfortune of stepping into a cleverly constructed trap - if only momentarily. The nature of alpha is elusive, and that is why investors will pay for it.

The Exception to the Rule

Like all good rules however, there are exceptions. In my view, activist hedge funds represent one such exception. It could be said that activist managers in some ways represent the only strategy that generates alpha to some degree. While not ......................

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