The Index Revolution (Finally) Comes to Hedge Funds

group of people stacked on each other holding flags

The index revolution in hedge funds is here!  Well, actually, it arrived fifteen years ago — but established allocators spent the first decade or so fighting it tooth and nail to prevent it from spreading and, in the process, tried their damnedest to convince everyone it couldn’t, wouldn’t or shouldn’t work.  So here we are […]

Did Morningstar Just Make the Case for Hedge Fund Replication?

signs in the sunset

Morningstar recently published two comprehensive reports that should be required reading for anyone interested in the liquid alternatives space.  The 2021 Global Liquid Alternatives Landscape tackles the difficult experience of most investors in the space due to numerous product “challenges”; aptly, it’s subtitled, A new generation of strategies aims to deliver where pioneers failed.  A second report, Mind the […]

How Hedge Funds Became the New Fixed Income Substitute

substitute sign

Almost overnight, allocators started to swap out fixed income exposure for hedge funds.  What’s driving this?  Two trends:  after large and sudden drawdowns in both 2020 and 2021, many allocators simply want out of traditional fixed income; meanwhile, with alpha back, hedge funds appear to have much better return potential with comparable or lower risk.  Recent oversized drawdowns Let’s start with the first trend.  The difficult reality today is that fixed income investors face paltry expected […]

Wrestling with the Hedge Fund Paradox

glass building

Hedge fund investing has always been something of a paradox:  potentially powerful diversification benefits, but at the price of illiquidity, egregious fees, opacity, embarrassing blow ups and often insurmountable minimums.  Since the early days of the business, there have been six waves of products designed to preserve the benefits while addressing the drawbacks. Broadly speaking, […]

Dusting Off Graham and Dodd? Hedge Funds Say the Value Rotation is Real


Have hedge funds bought into to the much-discussed value factor rotation that began in the Fall? The short answer is yes, in a big way. Strategies that replicate portfolios of hedge funds using factor models can determine how hedge funds are positioned today across major equity markets, and how those positions are changing.  It follows, […]

Hedge Funds Are Back!

railroad tracks

Pundits love to beat up on hedge funds these days.  The glory days are long gone, they argue, and investors should stick to low cost, passive investments like the S&P 500.  For nearly every fund that proved its mettle during March, another two imploded.  Hedge fund fees mean investors are in a heads-you-win-tails-I-lose trap (disclosure:  a point the author himself has […]