Perfectly said!
Hedge funds promise alpha, but the big names play a different game — maximizing AUM, not returns. The real opportunity lies in: - Specialist managers with unique strategies. - Small, nimble teams free from legacy burdens. - Technology that amplifies returns while lowering costs. Alpha isn’t dead. You just need to look in the right places.
Generating "Alpha" i.e. the returns uncorrelated with the broader market is challenging, especially with the advent of Smart Beta with long-term investment in passive assets that track and replicate the performance of broader market indices. Counterintuitively, Portable Alpha, a strategy of generating alpha returns combining beta itself is gaining traction these days. Our research at Dirac Alpha shows that it can be further enhanced by diversifying across indices (for example, S&P 500, QQQ, Dow), sectors (XLE, XLC, XLF, and Value, vs Growth in general), geographies (Developed vs Emerging economies), and by adjusting for volatility and trading frequencies (Long term, mid-term, and high frequency) with different weights (Equal or Value weighted).
Partner at Akin, Investment Management | Hedge Funds | Private Credit | Private Equity
Portable Alpha is a strategy that seems to be regaining traction in the hedge fund space. The concept: (1) an alpha source provides uncorrelated returns to investors (e.g., via an allocation to a market-neutral equity long/short or merger arb/event-driven fund), and that investment is overlaid with (2) a beta source that tracks a benchmark, typically via derivatives (e.g., S&P 500 futures). We’ve seen a few larger, multi-strat firms offering this as one product flavor to a larger audience, but more typically this is provided as an SMA or other customized solution tailored to an investor’s preferences.
This piece by Robert Stock, PhD is must-read for hedge funds and asset managers: https://lnkd.in/geuuQAXX Why? Imagine there was an efficient, systematic way to piggyback on the best ideas by informed traders (ie, not having to buy lots of data sets or have a team of analysts comb through reports). In the piece, he goes through the process of building and testing an equity long-short portfolio as a starting point, using a Sentiment family of factors in a risk model plus an optimizer.
Forbes has just released its latest insights into the top-performing hedge funds of the year, highlighting exceptional strategies and investment prowess. The article delves into the strategies that have propelled these funds to success amidst evolving market conditions, showcasing their ability to navigate challenges and capitalize on opportunities. Discover which hedge funds made the prestigious list and explore the innovative approaches they've employed to deliver outstanding returns. Whether you're an investor seeking inspiration or simply interested in the dynamics of financial markets, this Forbes article offers valuable perspectives. Check out the full article here for an exclusive look at the top hedge funds shaping the future of investment: https://lnkd.in/e6K4U2cF Branded Hospitality Ventures #HedgeFunds #InvestmentStrategies #FinancialMarkets #Investing #venturecapital Elizabeth Humphrey Laura Brusca Amy Feldman Alex Konrad Bridgewater Associates Renaissance Technologies LLC Two Sigma AQR Capital Management Maritza DaSilva John Brooks Klingenbeck Colin Beirne Amar Doshi Sachin Nagpal Dusan Perovic Gerret Van Duyne
https://lnkd.in/gxBZ7HRJ Bored with the same old returns? Get to know the secret strategies that hedge funds use to make profits above the market. This video reveals investment techniques in full, along with analysis examples that will make you see new opportunities!
While offering promising opportunities, hedge funds also carry unique risks. Read more: https://lnkd.in/ejne59Ue Post written by Steven Brod, Forbes Councils Member.
Guide to starting a U.S. hedge fund: covers investment strategies, legal compliance, challenges, and actionable insights.
Unlocking the world of hedge funds: What makes them a unique and complex asset class? Dive into our latest blog post to understand the strategies, risks, and rewards behind these investment vehicles. 📊🔍 Check it out here 👇 #Hedgefunds #Investmentstrategies #Financeexplained
As always, context matters. With Stock-picking hedge funds seeing the most gains so far this year, many still didn't top the markets overall. Jon Caplis shares thoughts with Hema Parmar of Bloomberg on why stock-picking funds' returns have been mixed, despite rising values across certain sectors and geographies. One potential implication on performance has had to do with the level of exposure to equities since 2022. PivotalPath data shows that while the average tech fund ramped up its exposure to the Nasdaq by 37% — the highest level since May 2022 — that’s still far from a peak at the start of that year. Ryan Walker #hedgefunds https://lnkd.in/eVY8hCqk
Hedge fund fees on total return just don't make sense when cash is yielding >5%. ExodusPoint one of the latest funds to *proactively* restructure their fees to include a cash hurdle, an early mover in what is likely to be a broader industry trend in coming years. The challenge for most asset managers is that this is effectively a cut in their fee generation which is critical to support the enormous organizations and highly paid PMs running the money. If those fees don't come, talent will leave, undermining the business. It's why we are likely to see a much more bifurcated HF industry ahead where 1) those that really do generate alpha net of fees collect assets and talent and 2) low cost replication products that do a pretty good job delivering the return profile but without the overhead. Both leaving those managers that can't justify their fees in the dust. https://lnkd.in/eAKvCkV5
📉💼The Rise and Fall of Hedge Funds: Hedge fund launches surged but are now declining. High costs, regulatory burdens, and smarter investors are making it tough for start-ups. While the market becomes more efficient, we might be losing out on new ideas. Larger firms now dominate. #Finance #HedgeFunds #Investing
