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By: Alexander Ineichen. Once upon a time, not so long ago, there was a bear named Winnie-the-Bear who lived in the Trillion Acre Wood. On some level, he was a silly old bear. Nevertheless, he was wondering what the fuss about hedge funds was all about. He invited his two best friends, George Jones, the famous hedge fund manager, and Ben Put, the famous academic and central banker since the 1980s, to the Trillion Acre Wood for a third chat on ...
Over the past few years, it has become clear to many that raw performance-based compensation for hedge fund managers has significant flaws – from its asymmetry to its inability to distinguish between skill and luck. Various tweaks have been proposed (as you can see in our section on fees). But here is one idea that integrates several dimensions of risk with traditional performance metrics. Eric Hirschberg is the CEO of the Bermuda-based fixed income manager Orion Investment Management. He also ...
The world is full of middle-men: Walk into a car dealership to purchase a car and you go through a salesperson, who takes a cut for showing you the car; walk through a house or apartment and the real estate broker takes a cut for opening the doors and closets.
Like it or not, and as counter-intuitive as it sometimes may be, it is the way transactions work.
So it’s been with the securities, or “sec” lenders: institutions that have access to "lendable" securities. Asset managers who have securities under management, custodian ...
Like Democrat versus Republican, Communism versus Capitalism or Yankees versus Phillies, discussion and debate over fees, their justification and their pending demise is perennial and never-ending. With each market downturn and never-again wave of investor revolt, the banter over whether alternatives managers can and should be exorbitantly charging for their services inevitably heats up.
Certainly AllAboutAlpha.com is just as guilty when it comes to focusing on and feeding the fee frenzy. Only a few weeks ago we published this post about the yet-again demise of 2 and 20 in light of ...
With the explosion of hunters searching for the same scare alpha and the proliferation of high-frequency trading, is asset management still "all about alpha"? Yes, says Jane Li, CAIA, of FundQuest, a division of BNP Paribas. Her research of over 10,000 mutual funds (both alive and dead) managing $4 trillion shows that it depends on which category of fund you're talking about.
Special to AllAboutAlpha.com by: Jane Li, CFA, CAIA, Manager, Investment Management & Research Team, FundQuest
Many argue that more efficient financial markets permanently reduce the potential for managers to produce ...
Hedge funds: you either love 'em or hate 'em, right?
Well, it appears that investors and commentators may actually love them and hate them at the same time. As Wikipedia defines a "love-hate relationship:"
"...a personal relationship involving simultaneous or alternating emotions of love and enmity. This relationship does not have to be of a romantic nature, and may be instead of a sibling one. It may occur when people have completely lost the intimacy within a loving relationship, yet still retain some passion for, or perhaps some commitment to, each other."
It ...
According to a June 2009 research note on "How Institutional Investors Think About Real Estate" by the Harvard Business School, institutions invest in real estate,"...because of its returns, the high cash flow component of its returns, the dampening of the volatility in a portfolio and as an inflation hedge." The note concludes that real estate is, "...an increasingly important component in the portfolios of institutional investors." Despite the bath taken by some real estate investors in ...
Two thousand and eight was all about the big drop in hedge fund returns, while 2009 was all about the big rebound. So with the markets seemingly having righted themselves, the focus among investors this year is coming back to strategy - convertible arbitrage, distressed, global macro, technology and others that fall under various categories depending upon what their managers do and on what markets they are focused. One strategy commanding particular attention is merger arbitrage, which ...
Earlier in the week, we told you about a great 100 page "mini-book" on alpha/beta separation. The authors (Analytic Investors' Roger Clarke & Harindra de Silva and Brigham Young University's Steven Thorley) provide a clear and cogent argument for why you'd want to separate and re-proportion the active and passive components embedded in any actively-managed investment mandate. While the generic case outlined in the document involves a traditional long-only active fund, the authors also explore the ...
The voluntary nature of hedge fund reporting has made many commentators see hedge fund indices and, by extension, hedge fund industry performance, with a somewhat jaundiced eye. Since hedge fund databases are designed as surreptitious marketing vehicles for hedge funds, the worst performing funds are likely to be absent from the indices. But others counter that the best performing funds are also likely to abstain from voluntary reporting since they believe it might be viewed as ...
