Look what’s coming back now
Feb 10th, 2009 | Filed under: 130/30, Alternative Beta & Hedge Fund Replication, Today's Post
Looks who’s making a return trip to the news after being largely tossed away by the media last year. It’s alternative beta and 130/30. As regular readers will recall, these hedge fund relatives seems to have died off last fall. But this week, several firms announced new funds aimed at resurrecting interest in “hedge fund replication” and “short-extension” strategies. And who knows, the time may now be right for these quasi-hedge fund instruments.
Clones or Zombies Back from the Dead
Hedge Funds Review reported today that Invesco, the mutual fund giant, launched an alternative beta strategy called “Premia Plus” (not to be confused with Premium Plus, the perfectly flaky cracker from Kraft). Without calling itself a “hedge fund” (now a four letter word in the post-12/11 environment), the company borrows heavily from the hedge fund lexicon. According to Hedge Funds Review, Invesco says it has developed a proprietary risk management strategy that “could generate equity-like returns with bond-like risk.”
The magazine also reports that Invesco is emphasizing many of the now de rigueur qualities of liquidity, low price and “transparency”. (Although we wonder how useful “transparency” really is when the product still uses a “proprietary risk management and rebalancing technique”).
Not content to let Premia Plus steal the headlines, Barclays Capital just launched the “Barclays Alternatives Replication” Index last week. The index comes in long and short versions called LBAR and SBAR (much like Innocap’s products and T-Rex offered by Socgen). Barclays says that LBAR tracked the HFRI better than “four main competing hedge fund indexes” last year. This statement is a refreshing change in a field where companies often seem to compete on the basis of performance, not tracking error.
Why the reincarnated interest in hedge fund replication? According to Reuters: More…
To continue reading this article please login (at the right) or click here to learn more about accessing our archives.
