Bridgewater: Hedge fund leverage now at levels not seen since LTCM

Apr 19th, 2007 | Filed under: Alternative Beta & Hedge Fund Replication, Investment Management Fees | By:
Be Sociable, Share!

As regular readers know, we are big fans of Bridgewater Associates. Their quintessentially “alpha-centric” view of the world amounts to a case study in modern portoflio management. The firm put out an interesting note in January that was recently brought to our attention by blog wonderkid Yaser Anwar over at investmentideas.blogspot.com.

The following excerpt succinctly sums up the philosophy shared by $100b+ Bridgewater and the somewhat smaller, but no less enthusiastic, AllAboutAlpha.com:

“As you know, we generally view the move into hedge funds as part of the evolution of money management. As we have described for many years now, the investment world should, and will, evolve towards a world of separating passive investment decisions (we call them beta) from active investment decisions (alpha). Most institutional investors continue to tie together their alpha and beta decisions (i.e. an institution typically decides how much money they want in equities and then goes out and hires equity managers to manage it). This is clearly inefficient, as the two decisions need not be linked.”

More…

Be Sociable, Share!

To continue reading this article please login (at the right) or click here to learn more about accessing our archives.

One comment
Leave a comment »

  1. [...] But regular readers may recall this posting about how leverage was indeed on the rise to 200% (not 500%). [...]

Leave Comment