Replication de fonds de couverture

Feb 4th, 2008 | Filed under: CAIA Alternative Viewpoints Columns, Guest Posts | By:
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As we pointed out in a posting a couple of weeks ago, there seems to be a little je ne sais quoi in the water in Montreal that breeds hedge fund replication providers.  Today, Montreal-based Pierre Saint-Laurent, head of the Canadian chapter of the CAIA Association weighs in on why the city founded by sailors in 1642 is now making waves in the hedge fund world.

Why Montreal is such a hotbed of hedge fund replication research

Special to AllAboutAlpha.com by: Pierre Saint-Laurent, CFA, CAIA, president of AssetCounsel Inc. and head of the Canadian chapter of the CAIA Association

Alternative investments, and hedge funds in particular, have raked in the assets so far in the 21st century because of low returns from traditional strategies, pension fund deficits, an urge to diversify (and maintain low correlations even when all traditional asset classes spike, such as in the tech meltdown) and somewhat of a ‘nothing works anymore’ mindset.

Indeed, investors seem to like alternatives so much that they are willing to deal with lower transparency, hard-to-explain strategies, and (arguably) higher fees.  There’s a reason for all that: alternative asset managers, and hedge fund managers in particular, need the secrecy and privacy to move quickly and efficiently.

That’s essentially what Alan Greenspan alludes to in his autobiography, The Age of Turbulence.  The former Fed Chairman states that hedge fund regulation should not be increased, as this would destroy the nimbleness of alternative strategies.  Moreover, reporting fund activity to authorities would be a joke – the positions in the fund would have changed by the time the printer’s ink was dry, according to the erstwhile-clarinetist-turned-Most-Powerful-Man-in-The-World.

But not everyone seems to agree – some, for pure academic research reasons (i.e., climbing the Everest for no other reason than ‘that it is there’) and some for more profit-oriented reasons.  Ergo, alternatives to alternatives have now emerged.

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3 comments
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  1. Very interesting text 9.510, I appreciate the whole viewpoint Mr Saint-Laurent.

    If I resume what Mr Saint-Laurent said in Allaboutalpha’s terms; Montreal have a low Alpha average, Montreal is under-evaluated by financial analysts and media in general. There are underdogs Quants very open-mind out there. They were also early adopters of alternative investments.

    SJ

  2. [...] Montreal is a hotbed of hedge fund replication research. (All About Alpha) [...]

  3. It’s a very interesting essay indeed ! Actually I’ve found one french canadian organization that help individual investors create and manage their own custom-made hedge funds, and i’m telling, it really works. Their website :http://www.thesophisticatedinvestor.ca

    Guy A. Carbonneau

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